Linklaters has advised an ad hoc group of bondholders and lenders (AHG) on a debt restructuring agreement with Sunac China, a Hong Kong-listed property developer in China and the fourth largest developer by sales in 2020.
Linklaters advised the AHG, which holds over 30% of Sunac China’s outstanding offshore debt of more than US$10.2bn, on entry into a restructuring support agreement to facilitate the implementation of the restructuring via one or more schemes of arrangement in Hong Kong, together with recognition proceedings in other relevant jurisdictions.
The restructuring will, amongst other things, allow the company to extend the maturity of its offshore debt by two to nine years and de-lever via conversion of certain of its existing indebtedness into a US$1bn convertible bond; up to US$1.75bn mandatory convertible bonds (at the election of creditors); and 14.75% of the shares of Sunac Services (at the election of creditors). The restructuring also provides for equitisation of certain shareholder loans, cash sweeps from various onshore and offshore asset disposals and enhanced governance and other information rights.
The restructuring is intended to provide Sunac China with a long-term, sustainable capital structure that enables the company to stabilise its business and to protect value for all stakeholders. Subject to sufficient creditor support, it is anticipated that the scheme of arrangement to implement the transaction will be one of the largest ever by value.
Linklaters cross-border and multi-jurisdictional team was led by Restructuring & Insolvency partner James Warboys, with support from associate Ewan Smith, managing associate Max Krasner (all London), Capital Markets partner Taiki Ki, and Restructuring & Insolvency associates Mustafa Rehman and Joanne Tsoi (all Hong Kong SAR).
The envisaged transaction is testament to Linklaters’ market-leading, global restructuring capabilities in Asia and London. It also reflects the cross-practice team’s ability to advise ad hoc groups of creditors and to coordinate highly complex multi-jurisdictional large-cap restructuring transactions.
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