On November 14th, the highly anticipated sunac domestic bond second restructuring plan was released.

On November 14th, Sunac Real Estate Group Co., Ltd. announced the domestic bond second restructuring plan, including cash tender offer, stocks and stock economic benefit payment, debt-to-equity swap, and full extension period, totaling four options.

It is reported that this restructuring involves approximately 15.4 billion yuan of csi enterprise bond index, including H Sunac 05, H Sunac 07, PR Sunac 01, and 20 Sunac 02, etc.

According to the announced cash tender offer plan, Sunac Real Estate intends to use cash, expecting to launch a cash tender offer to repurchase at a price of 18% of the face value of each symbol bond, with the total amount of cash used for repurchase not exceeding 0.8 billion yuan; the cash payment is expected to be no later than 20 trading days after the approval by the holders' meeting and completion of the relevant registration.

"Sunac's cash buyback plan leverages 0.8 billion yuan in cash to reduce about 3.6 billion yuan in debt," a real estate industry analyst told reporters.

The second option is the stocks and stock economic benefit payment plan, with the total expected principal of the symbol bonds in this plan about 3 billion yuan.

Specifically, in the plan, Sunac China will issue a specific number of shares to a special purpose trust in Hong Kong, each symbol bond with a face value of 100 yuan corresponding to approximately 13.5 shares of Sunac China stock, with an estimated total issuance of new shares of about 0.4 billion shares, to be determined based on the final choice amount of bondholders. Sunac Real Estate undertakes to pay the equivalent net domestic funds obtained from the stock realization to bondholders who choose this plan, with the stock realization completion time of 12 months.

Looking at the company's stock performance, as of the close on November 14th, Sunac closed at 2.64 Hong Kong dollars per share, with a total share capital of 9.231 billion shares. Based on the previous plan of exchanging 13.5 shares of Sunac stock for every 100 yuan face value bond, roughly estimated at today's closing price of 2.64 Hong Kong dollars per share, the price of 13.5 shares of stock is 35.64 Hong Kong dollars (equivalent to 33.18 yuan); that is, a 100 yuan face value bond corresponds to approximately 33.18 yuan of stock. The final amount that bondholders who choose this plan will realize also has a significant relationship with the high or low price of Sunac stock.

The third option is the debt-to-equity swap plan, which accepts a maximum principal of about 4.1 billion yuan.

Sunac Real Estate intends to entrust the specific asset income rights held by its indirectly controlled subsidiary to a trust company to establish a service-type trust. The issuer will exchange the discounted trust units it holds for the target bonds selected by the bondholders who choose the debt-to-equity swap plan, with an estimated 35 yuan trust unit exchange for every 100 yuan face value of target bond. After bondholders acquire the service trust units, they will indirectly hold the specific asset income rights of the issuer's subsidiary company, and the service-type trust is expected to last for 4 years.

The final option is the full-term extension plan.

The announcement stated that if the bond restructuring plan proceeds smoothly, the company will pay approximately 1% of the principal for the target bonds choosing the full-term extension plan in cash after the above options are completed. The remaining principal will be extended until June 9, 2034, with half-yearly cash payments starting from December 9, 2029 for the principal, and the interest portion will be uniformly reduced to around 1%. Interest accrued during the past and extension periods will be paid on the final principal payment date, with simple interest and no compound interest.

"Due to Sunac's domestic bond scale of 15.4 billion yuan, the first three options can accept a maximum of 11.5 billion yuan in bond principal. Therefore, the debt scale of the final full-term extension plan is approximately 3.9 billion yuan," the analyst pointed out.

Informed sources have told reporters that if the domestic bond restructuring plan is successfully implemented for the second time, Sunac is expected to successfully reduce over 50% of its domestic debt, with no repayment pressure in the next 5 years.

"If this plan is approved, Sunac can avoid defaulting again in the short term and better focus on delivering projects at the project level, which is conducive to the recovery of its operations," said an analyst.

However, Sunac real estate indicated that there is a certain level of uncertainty regarding whether the above-mentioned options can be implemented, as some of the options still need to go through the internal approval process of institutions such as reits.

"The above-mentioned restructuring options are preliminary plans to be promoted, and have not been finally determined. The company will proceed with this bond restructuring plan in the form of convening a bondholder meeting, and the resolutions contained in the notice of the bondholder meeting shall prevail," Sunac real estate said.