Chinese property developer Powerlong signs restructuring deal with creditors in ‘significant progress’ for debt solution plan

Distressed Chinese developer Powerlong Real Estate Holdings unveiled the preliminary terms of a restructuring agreement with an ad hoc group (AHG) of creditors late on Thursday, a deal which is expected to give the Shanghai-based company a brief respite from the ongoing debt crisis.

The builder said it had agreed with the AHG on restructuring its offshore bonds, which gave bondholders options such as swapping their holdings for shares in the company’s subsidiary Powerlong Commercial Management Holdings or for convertible bonds of the company, according to a filing made to the Hong Kong stock exchange.

“The company would like to update its shareholders and potential investors on the significant progress of the company’s plan for a holistic solution to certain offshore debt of the company,” it said.

The aggregate amount of the options will not exceed US$715.7 million, the term sheet showed. Other options included replacing their holdings with newly issued medium-term notes, long-term notes, and a fresh loan, with the maximum amount of entitlement under the various options ranging from US$238.5 million to US$588 million.

The AHG members hold about 27 per cent and 35.6 per cent of the aggregate outstanding principal amount of the scheme debt and the existing notes, respectively, the statement said.

The statement said the company and the AHG agreed on “certain key terms of the proposed holistic solution and undertook to work together in good faith and use commercially reasonable endeavours” to agree further on detailed terms in a restructuring support agreement (RSA) on or before 23 February next year.