China Fortune Land restructuring plan for US$4.96 billion in offshore bonds provokes push-back from creditors
- An ad hoc group of creditors is asking bondholders not to support the company’s proposal for restructuring offshore debt unless it is revised
- The company proposes swapping US$4.96 billion in offshore bonds for new bonds with maturity of eight years
A block of China Fortune Land Development’s offshore bondholders is calling on creditors not to back a debt-restructuring proposal unless it is revised according to the group’s demands.
An ad hoc group of creditors made the ultimatum in a call with the bondholders late Thursday. The China Fortune Land Development (CFLD) restructuring plan proposes an eight-year extension of US$4.96 billion in outstanding offshore debt.
“The offshore proposal is so bad that the ac-hoc committee is not minded to support it in any way,” Howard Lam, a partner at Latham & Watkins, the law firm representing the ad hoc group, said on the call. Lam said the group would be forced to take further action if the company failed to address its demands.
A CFLD representative contacted by the Post declined to comment.
The ultimatum underscores rising tensions between defaulted issuers and offshore investors during a long restructuring process, and could serve as a warning for other Chinese developers, such as China Evergrande Group, which is expected to issue its offshore restructuring plan by November.
Creditors represented by the ad hoc group hold more than 25 per cent of the outstanding principal on the offshore bonds, according to its representatives on the call, who vowed that the creditors “remain ready, willing, and able to exercise that blocking stake”.