Shimao proposes restructuring to ad hoc group of offshore creditors

By Marisa Wong

Los Angeles, Dec. 7 – Shimao Group Holdings Ltd. made an announcement on Thursday on the progress of its offshore debt restructuring.

For the past several months the company and its financial and legal advisers have been pushing forward a proposed restructuring of the company’s offshore debt, including dollar-denominated senior notes and some unsecured offshore credit facilities in an aggregate principal amount of about $11.7 billion.

The company said it continues to maintain constructive dialogue with various groups of creditors with the goal of easing its current liquidity challenges and implementing a restructuring plan that treats all its creditors fairly and protects the interests of all its stakeholders.

According to Thursday’s update, the company has proposed a preliminary restructuring framework to an ad hoc group of offshore noteholders and a group of the company’s offshore bank lenders that in aggregate hold a significant portion of the group’s offshore debt.

The company is seeking to create a meaningful runway to improve its operating performance and deleverage by about $6 billion to $7 billion in order to enhance its financial strength and business operations.

The preliminary restructuring framework comprises the following key elements:

• Exchanging a portion of existing debt into new debt instruments secured by a collateral package that consists of the group’s key offshore assets, with maturities up to nine years from the restructuring effective date;

• Exchanging a portion of existing debt into a capped amount of new senior secured debt with similar collateral package ranking in priority to other new debt instruments, at a discount to principal amount of the existing debt. The new senior secured debt would be repaid ahead of other new debt instruments;

• Exchanging a portion of existing debt into equity-linked instruments of the company that upon relevant approval and full conversion will be converted into a significant percentage of the common shares of the company; and

• Offering a consent fee to creditors who provide their support to the restructuring proposal before certain deadlines.

As of Dec. 7, no definitive agreement on the terms of the offshore restructuring has been entered into between the company and the group of creditors, the company noted.

As at June 30, the group had offshore interest-bearing debt of about $14 billion; onshore interest-bearing debt of about $25 billion; amounts due to related parties of roughly $3 billion; and total equity of about $9 billion, which includes about $6 billion attributable to non-controlling interests.

Among the said offshore debt, around $7 billion was dollar-denominated senior notes, about $3 billion was syndicated loans, about $2 billion was bilateral loans and about $2 billion was secured project loans.

The interest-bearing debt balances as of Oct. 31 are not materially different from the figures as of June 30. There is a significant number of onshore debt claims that benefit from guarantees provided by offshore entities within the group, the company noted.

Shimao is a real estate company based in Shanghai.

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