By YANG Bingke
Sunac China announced on Monday that the conditions for overseas debt restructuring had been fulfilled and were officially effective as of that day. The total amount is approximately US$10 billion (71 billion yuan).
These debts will be replaced, based on creditors’ choices, with six newly-listed US-dollar bonds, mandatory convertible bonds, convertible bonds, and equity in Sunac Service. New bonds are expected to be listed on the Hong Kong Stock Exchange on Tuesday.
The plan means US$4.5 billion of overseas debt is paid off for now, about 45 percent of its overseas debt, and providing a buffer period of 2-3 years. Sunac completed domestic restructuring of 15.4 billion yuan in January, with an overall extension of 3-5 years.
Sunac is the first large real-estate company to complete restructuring of domestic and overseas debt. The process took 18 months, resolving a total debt of about 90 billion yuan.
Sunac’s stock price and bond prices remain at historic lows, and home sales have not improved, so the pressure is still on, and risk remains. At present, the focus is on delivery.
On the sales side, despite various policies in the second half, the market is still at the bottom. Sunac’s sales in October were half what they were a year ago. Sales in the first 10 months are likewise half what they were last year.
On the financing side, although Sunac needs time to resume normal financing in the public market, so cash will still be tight for some time to come.
In 2022, Sunac completed the delivery of more than 180,000 residential units. In the first 10 months of this year, the delivery volume was 205,000 units.
After completing the overall domestic and overseas debt restructuring, Sunac has a small amount of cash to ensuring deliveries. The goal for this year is 300,000 units.
