Distressed Chinese builder Logan aims to cut leverage by US$3 billion as some creditors consent to US$8 billion debt workout plan
- Logan Group aims to cut its offshore debt by as much as US$3 billion over the next nine years to align with its income power
- Developer offers to repay US$6.65 billion of offshore bonds and US$1.35 billion of shareholder loan with a combination of cash and new notes
The Shenzhen-based developer aims to reduce its leverage by US$2.6 billion to US$3 billion over its offshore restructuring period, according to a stock exchange filing. The firm had 227 billion yuan (U$32 billion) of total liabilities at the end of June last year, according to its latest financial accounts.
The company expects to generate US$65 billion to US$75 billion of revenue from onshore property sales during the offshore restructuring period, and raise about US$4 billion to US$4.7 billion of cash to service its debts, according to its projection.
“This suggests that the company will need to adjust its balance sheet to a reasonable level to achieve a sustainable capital structure,” it added. “The group has made significant efforts to maintain stable operations, ensure the delivery of units to homebuyers, and preserve its resources, including both onshore and offshore assets and cash for the purpose of restructuring.”
Logan Group has offered a mixture of cash, convertible bonds, and new long-term notes maturing up to nine years to repay investors holding its 12 foreign-currency bonds with a total face value of US$6.65 billion. It will also offer the same combination to its controlling shareholder, who has loaned the company US$1.35 billion to tide over its financial crisis.
The developer said some undisclosed creditors have given their consent to the proposed repayment terms, according to the filing on late Friday. It will attempt to get approval from other creditors, and persuade others to drop their winding-up petitions against its units in Hong Kong.
