E-House announces invitation for irrevocable restructuring support

By Wendy Van Sickle

Columbus, Ohio, April 3 – E-House (China) Enterprise Holdings Ltd. plans to propose new schemes to holders of its $298.2 million 7 5/8% notes due April 18, 2022 and its $300 million 7.6% notes due June 10, 2023, as well as the holder of its HK$1,031,900,000 2% convertible note due 2023, according to a company update.

Scheme creditors who are not blocked scheme creditors can participate in the invitation for irrevocable restructuring support.

If the new schemes are court sanctioned and become effective, the company will pay a restructuring consideration of $60 per $1,000 of the scheme creditor claim held by each scheme creditor.

In the case of a scheme creditor that is a holder of the old notes, the company will pay shares in a special purpose vehicle issued pro rata by reference to the scheme creditor claim that each such scheme creditor held at the record time as a proportion to the scheme creditors’ claims of such scheme creditors.

Also, on the restructuring effective date, the company will cause TM Home Ltd. to issue a number of new shares of TM Home to the creditor special purpose vehicle and the convertible holder, Alibaba.com Hong Kong Ltd., on a pro rata basis, such that a total 65% equity interest in the share capital of TM Home will be held collectively by the creditor special purpose vehicle, the Alibaba.com Hong Kong and TM Home minority shareholder Alibaba Investment Ltd.

The company plans to fund the cash consideration under the restructuring plan with external financing, including, but not limited to, raising about HK$480 million by way of a potential rights issue, which is expected to be underwritten by Zhou Xin, a substantial shareholder and director of the company.

The restructuring aims to give scheme creditors a combination of cash and a controlling equity interest in TM Home, an entity that will upon completion of the restructuring hold and operate the company’s two stable lines of business, which are the real estate data and consulting services business currently operated under CRIC Holdings Ltd. and the online real estate marketing service business in partnership with Tmall Network. TM home also holds a controlling stake in Leju Holdings Ltd., a subsidiary of E-House. TM Home will not operate or hold the company’s real estate brokerage network services conducted under the “Fangyou” brand name.

Certain holders of old notes will not be able to participate in the invitation for irrevocable restructuring support because of financial sanctions imposed regarding Russia.

On April 2, the company entered into a restricting support agreement with Alibaba.com Hong Kong, under which Alibaba.com Hong Kong agrees to support the potential restructuring of the old notes and the convertible note via the new schemes.

Eligible holders are invited to submit electronic consent instructions to the clearing system and a duly executed accession deed and restricted notes notice. By doing so, each consenting creditor confirms it will use and vote all of its interest in the old notes to approve and fully support the restructuring and the Cayman scheme on the terms contained in the restructuring support agreement.

Subject to the receipt of votes in favor of the Cayman scheme from a majority in number of scheme creditors representing 75% by combined value of the old notes and the convertible note that are present and voting, in person or by proxy, at the meeting convened to consider the Cayman scheme, the company will ask the Grand Court of the Cayman Islands to issue a Cayman Sanction Order sanctioning that scheme.

Subject to the receipt of votes in favor of the Hong Kong scheme from a majority in number of scheme creditors representing 75% by combined value of the old notes and the convertible note that are present and voting, in person or by proxy, at the Hong Kong scheme meeting, the company will ask the High Court to issue a High Court Order sanctioning the Hong Kong scheme. Assuming the Cayman scheme is sanctioned by the Cayman court and the Hong Kong scheme is sanctioned by the High Court, the Cayman scheme and the Hong Kong scheme would become effective and binding upon all holders of the old notes and convertible note.

An instruction fee of 0.25% of the total outstanding principal amount of eligible notes plus accrued interest is to be paid to holders who have acceded to the restructuring support agreement by way of the accession deed and restricted notes notice by the deadline, has voted in favor of the Cayman and Hong Kong schemes at the relevant meetings and have not exercised any right to terminate the restructuring support agreement.

The accession deed and restricted notes notice must be delivered electronically at https://sites.dfkingltd.com/E-House during the period from April 11 to the RSA expiration deadline, which is set for 11 a.m. ET on April 28, unless terminated earlier or extended.

D.F. King Ltd. (852 5803 0895, +44 20 8089 2616 or E-House@dfkingltd.com) is the information agent for the invitation for irrevocable restructuring support.

Blocked scheme creditors can contact E-House (ir@ehousechina.com).

Shanghai-based E-House mainly offers real estate agency services in the primary market, real estate data and consulting services and real estate brokerage network services. The company filed bankruptcy on Oct. 3 under Chapter 15 case number 22-11326.

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