China’s Shimao wins temporary reprieve from liquidation

Chinese property developer Shimao Group announced on Wednesday that a Hong Kong court has postponed a liquidation hearing until August 12. This extension will provide the company with additional time to collaborate with creditors on a revised restructuring plan.

The property sector in China has been grappling with a debt crisis since 2021, leading to numerous developers, including industry leader China Evergrande Group, facing liquidation lawsuits from creditors.

In April, China Construction Bank (Asia) filed a petition against Shimao for failing to repay approximately $200 million in loans.

The Shanghai developer defaulted on $11.5 billion in offshore debt in 2022. Last week, Shimao revised its restructuring terms to attract creditor support after facing opposition to the initial plan outlined in March.

Shimao’s revised proposal includes a minimum cash interest payment on new notes, a strengthened guarantee and security package, and a more favorable conversion price for mandatory convertible bonds (HK$6 per share, down from HK$8.5).

Additionally, the deadline for an early consent fee, incentivising creditor support, has been extended for the fourth time, now set for August 30th.

Attribution: Reuters