CFLD, China Fortune Land Development announced its restructuring plan for every 11 bonds comprising $4.96bn. The real estate company previously defaulted on its offshore debt last year. The company proposed to revamp cash payment of 1% from the existing bonds’ principal amount to agreed bondholders before October 13. Those who voted after the cash repayment deduction, the 46.7% of the principal would shift into a New Bond 1. So, they have the option to to exchange the remaining 53.3% from either New Bond 2 and New Bond 3. These combinations are available only for investors choosing from.
In this case, investors not submitting the bonds by the due date will have 46.7% of the principal exchanged for the 53.3% New Bond 1. All new bonds carry eight years tenor plus 2.5% coupon. According to Fortune Land, this would be the best effort for certain assets and use. Because it could redeem at least 64% of the principal of the New Bond 1 estimately by the end of 2023. In addition, the New Bond 1 has mandatory debt-to-trust unit swap allowing the company to shift above 35.8% of the new bonds principal. CFLD plans to dispose of seven industrial areas. Langfang for instance in Hebei province would be sold for Rmb42bn. Then some properties are on the price of Rmb33bn.
Then, the New Bond 2 is actually a convertible bond allowing swap either in the form of Cayman trust shares. It wholly owns a BVI special purpose vehicle. So, the shares go directly into the SPV. Meanwhile, the owner of Hong Kong SPV is the SPV. Then, it would hold the shares in the onshore China business portfolio. Fortune Land in this case plans offshore listing of the onshore business portfolio. The valuation comprises Rmb50bn. This would also allow the HK SPV to buy the shares at a valuation discount for Rmb37.5bn. In this scenario the bondholders will get $1.33 shares.