Chinese developer Shimao Group, led by billionaire Hui Wing Mau, has put across a restructuring plan to settle its USD 11.7 billion offshore debt. The proposal includes converting shareholder loans into long-term notes and mandatory convertible bonds. This move follows discontent among creditors over previous terms. Shimao's default on a USD 1 billion offshore bond in July 2022 triggered the entire offshore debt to default. The company joins a wave of Chinese developers grappling with offshore bond defaults. Despite challenges, Shimao's restructuring efforts aim to address financial obligations and stabilize its position in the property market.
Shimao Group, a developer from China, presented a fresh plan to reorganize its finances and settle its international debt, following the trend of many other property companies in China. The plan involves restructuring all of its debts, totaling approximately USD 11.7 billion in offshore bonds, notes, and various credit arrangements.
The new proposal comes after discontent among some creditors with the terms of an earlier plan presented in December after 18 months of negotiations, sources told Reuters.
Shimao has now offered bondholders four options, including repayment through short-term notes, long-term notes, zero-coupon mandatory convertible bonds, and a fixed combination of them.
Shimao stated that the short-term notes or loans to offshore creditors would be capped at USD 3 billion, while the long-term notes or loans would not surpass USD 4 billion.
Chinese-Australian billionaire Hui Wing Mau, the founder and majority shareholder of Shimao, has extended loans totaling HKD 3,963 million (USD 506.71 million) to Shimao through his owned companies, along with HKD 3,839 million (USD 490.85 million) in loans to different entities within the Shimao Group.
Hui plans to convert USD 600 million of existing shareholder loans into equivalent long-term notes and outstanding shareholder loans below USD 600 million into mandatory convertible bonds.
Shimao, headquartered in Shanghai, is one of numerous Chinese developers facing defaults on offshore bonds. In July 2022, it failed to meet interest and principal payments for a USD 1 billion offshore bond.
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