Shimao: Proposes $11.8B Debt Repayment Plan Over 3-8 Years

Over-indebted Chinese maker Shimao Group has proposed a two-tier restructuring plan to external creditors to repay $11.8 billion over a period of three to eight years, according to two sources with knowledge of the matter and a document obtained by it. Reuters.

China’s Shimao, which for the first time last month defaulted on its obligations to international investors, is the first major Chinese construction company to begin negotiations on restructuring terms with creditors.

China’s property sector has been hit by a series of defaults to international investors, with three of the industry’s five biggest conglomerates, China Evergrande, Kaisa Group, Sunac China, already defaulting on their dollar-denominated bonds.

Shimao’s restructuring plan, however, does not include its $2.3 billion offshore bonds, and loans backed by domestic financial institutions or subject to Chinese law.

Unsatisfied with the proposal, foreign investors plan to ask the company to treat all categories of offshore creditors equally, and to prevent the outflow of capital from the offshore entities, according to one of the sources.

Creditors also plan to ask the company to increase the amortization ratio and an improvement in terms to strengthen the debt’s credit profile, the source said.

Under the $11.8 billion debt restructuring plan, Shimao will repay Class A bonds, which are $4.65 billion worth of syndicated loans and guaranteed bilateral loans, with an amortization schedule of between 36-72 months.

Total Class B loans of $7.13 billion, all of which are public and private bonds and unsecured bilateral loans, will also be repaid in six tranches of new securities, worth 9%-23% of claims, with maturities of 39-93 months.