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Sunac China Holdings has obtained court approval to convert its offshore bonds totaling $9.6 billion into shares, with the restructuring plan expected to fully eliminate the company’s debts upon completion. The High Court of Hong Kong authorized the scheme, and the registration process has already been completed, the company announced yesterday from its base in Tianjin.
The restructuring proposal was initially introduced in April, involving the issuance of two mandatory convertible bonds that encouraged offshore creditors to become shareholders of the company. Support for the plan reached 75% by June and surged to 98.5% in October.
This approval positions Sunac as potentially the first major Chinese real estate developer to successfully complete its offshore debt restructuring since the onset of the property market downturn in 2021.
Earlier attempts at restructuring relied on a “debt reduction plus extension” strategy but failed to fully resolve the company’s debt issues amid ongoing market adjustments. In contrast, the new approach emphasizes converting debt into equity, enabling a faster reduction in liabilities.
Despite the news, Sunac’s stock remains unchanged at HKD 1.49 (around 19 cents USD) as of 1:45 p.m. local time, after experiencing an earlier rise of up to 3.4%.
In January, Sunac reached an agreement to cut its onshore debt by half, totaling CNY 15.4 billion (approximately USD 2.1 billion). The company plans to reschedule principal and interest payments on ten bonds following their holders’ approval of a second onshore restructuring plan.
Chinese property firms still face significant pressure to adjust their financial structures even after completing debt reorganizations, according to industry analysts. Many are shifting focus toward lighter asset-based businesses and service sectors, such as construction, property management, and asset management, aiming to rebuild sustainable operations at minimal cost.
Sunac is expected to meet its annual target of selling over 50,000 new homes this year, with its luxury project One Sino Park in Shanghai’s Huangpu District having sold over CNY 22 billion (about USD 3 billion) since the beginning of the year.
Additionally, the company’s construction management platform ranked 15th in the industry based on newly signed contracts in the first three quarters of the year.
From 2009 to 2014, Sunac experienced rapid growth, rising from a mid-sized builder to one of the top 10 in the sector. However, this rapid expansion carried hidden risks, culminating in a debt default in May 2022 amid the property market crisis. By November 2023, it had successfully completed debt restructurings on both domestic and international fronts involving approximately CNY 90 billion (around USD 12.6 billion).
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