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Sunac China has announced that it has reached agreements with creditors to settle its remaining two offshore debts. This marks the company’s milestone as the first Chinese real estate developer to resolve both its domestic and international debts.
Once the company finalizes the restructuring of its last offshore debt and repays its loan to Chiyu Banking, it will be able to restore its credit standing and ensure the continuity of its long-term operations, according to a statement released yesterday.
The process to restructure its remaining USD 9.6 billion offshore debt is expected to conclude around December 23, involving the issuance of mandatory convertible bonds to creditors.
As part of the restructuring agreement, creditors will have the option to convert their bonds into Sunac shares at a price of HKD 6.80 (approximately 87 US cents) per share within six months after the restructuring goes into effect. Alternatively, they may convert at a lower price of HKD 3.85 (about 49 US cents) per share between 18 and 30 months after the completion of the restructuring.
With an assumed exchange rate of HKD 7.80 to USD 1, fully converting all debt into shares would result in the issuance of over 13 billion new shares, roughly a 7 percent increase or about 900 million shares more than the previous domestic debt restructuring plan.
Following these offshore debt restructuring efforts and the resolution of earlier onshore debts, Sunac’s total share count is projected to rise to over 24.5 billion from approximately 10.6 billion at the end of last year.
The company also disclosed that it has finalized a restructuring agreement with its subsidiary in Sanya and Hong Kong lender Chiyu to address its remaining debt outside the scope of the offshore restructuring. The outstanding principal on this debt is HKD 858 million (USD 110.3 million).
According to the agreement, 35 percent of the principal will be converted into a loan with a ten-year extension, while the remaining 75 percent will be irrevocably discharged through the issuance of new shares. Sunac plans to issue 279.2 million new shares, representing about 2.4 percent of its total, at HKD 3.85 per share.
Chiyu’s direct parent company is Chiyu International Financial Holdings, a wholly owned subsidiary of Xiamen International Investment, itself wholly owned by Xiamen International Bank.
After completing both its domestic and offshore debt restructuring processes, Sunac’s overall debt burden is expected to decrease, reducing interest expenses and supporting sustainable business operations, noted Liu Shui, a research director at the China Index Academy.
However, Liu emphasized that while debt relief mitigates financial risk, the company’s future growth hinges on its ability to sustain sales growth—restoring cash flow and profitability remains crucial.
Liu also pointed out that although Sunac’s high-end projects in major cities like Shanghai and Beijing have performed well in sales, the company’s overall contracted sales continue to face challenges. Accelerating the reduction of inventory across other projects and revitalizing remaining stock are key issues that need to be addressed.
In the first 11 months of the year, Sunac’s sales declined by 25 percent year-over-year to CNY 33.9 billion (USD 4.8 billion). The total contracted sales area dropped sharply by 44 percent to 1.12 million square meters, though the average selling price increased by 34 percent to CNY 28,700 (USD 4,075) per square meter.
As of midday today, the company’s shares traded slightly higher at HKD 1.31 (around 16 US cents).
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