On December 24, the Financial Associated Press reported (Reporter Li Jie) that there has been new progress in SUNAC's second restructuring of domestic bonds.

It has been reported that four bonds under SUNAC Real Estate Group Co., Ltd. received voting approval from holders' meetings on December 24, including H1 SUNAC 01, 20 SUNAC 02, H1 SUNAC 04, a total of three bonds, and one ABS restructuring.

This also means that since the announcement of the overall restructuring plan for ten domestic bonds on November 27, six bonds have secured holder support for restructuring within three weeks.

SUNAC indicated that considering some creditors need more time to complete internal approval processes, the voting for the remaining four bonds has been adjusted to December 27 to ensure that creditors fully exercise their voting rights.

It is understood that due to sales performance and operations not recovering as expected, SUNAC announced a second restructuring plan for domestic bonds on November 27, including four options: cash tender offer, payment via stocks and economic rights, debt-to-equity swaps, and full-term extension.

The restructuring plan involves approximately 15.4 billion yuan in CSI Enterprise bonds, including H SUNAC 05, H SUNAC 07, PR SUNAC 01, and 20 SUNAC 02 among ten bonds.

Among them, H6 Real Estate 01 and H0 SUNAC 03 passed the restructuring vote on December 10, while the remaining four bonds H SUNAC 05, H SUNAC 07, PR SUNAC 01, and H1 SUNAC 03 have not completed the restructuring vote, with an unpaid total face value of approximately 8.2 billion yuan, accounting for 53% of the total value.

According to media reports, compared to other Bonds, the restructuring negotiations for PR SUNAC 01 are more difficult, with a certain financial institution in Shanghai holding more than 20% of this bond taking a tough stance.

Data shows that PR SUNAC 01 was issued on April 1, 2020, raising funds of 4 billion yuan, with a bond balance of 2.881 billion yuan and a coupon rate of 4.78%.

It is reported that during the first extension of 'PR SUNAC 01', SUNAC's Board of Directors Chairman and Executive Director Sun Hongbin signed a 'Guarantee Letter' to provide an irrevocable joint liability guarantee for this bond issue.

At the same time, SUNAC also pledged 70% equity and corresponding income of Qingdao Longyue Real Estate Co., Ltd., 5 billion yuan receivables formed by Qingdao Longyue, 100% equity and corresponding income of Henan SUNAC Aoxin Real Estate Development Co., Ltd., and 20% equity and corresponding income of Henan Runchao Xinchao Cultural Tourism Real Estate Co., Ltd. as collateral for the aforementioned Bonds.

Analysts pointed out that to impress the aforementioned debt holders, SUNAC may need to offer more favorable terms. If negotiations are still unsuccessful by December 27, the voting on the restructuring of these debts is estimated to be postponed again.

This time, SUNAC's domestic debt restructuring plan offers creditors four flexible options, including Cash / Money Market compensation, Stocks, Assets, and other repayment resources. At the same time, there are no mandatory options in the plan, and the repayment extension part has no upper limit, allowing creditors to freely choose based on their own demands,” said a fixed-income Analyst, adding that such a market-driven debt reduction plan is helpful for the company to 'survive', bringing corporate operations back to normal and protecting the interests of creditors.

In fact, insiders revealed that if the plan proceeds smoothly, SUNAC is expected to successfully reduce more than 50% of its domestic debt, with no repayment pressure within five years.

In recent times, there have been frequent reports of debt restructuring dynamics among real estate companies, and under the current difficult situation in the Industry, large-scale debt reduction has become an inevitable path for companies to get out of trouble.

"Comprehensive comparisons of market feedback on various plans indicate that the SUNAC plan is representative and progressing quickly," stated the Analyst. If SUNAC's debt restructuring is ultimately approved, it will become a symbolic event representing the collective efforts of all parties in the Industry to help the enterprise overcome difficulties.