Chinese builder Logan Group Co. has briefed some creditors about a draft proposal to restructure more than $6 billion in offshore borrowings, as indebted developers seek solutions after a series of defaults.
(Bloomberg) — Chinese builder Logan Group Co. has briefed some creditors about a draft proposal to restructure more than $6 billion in offshore borrowings, as indebted developers seek solutions after a series of defaults.
The proposal would include public bonds plus private notes and some syndicated loans, according to people familiar with the matter. The plan would extend the average term of Logan’s debt to slightly more than five years, said one of the people, who asked not to be named as the matter is private. Logan’s dollar bonds due in the next three years are indicated at below 17 cents on the dollar, according to prices compiled by Bloomberg.
China’s 27th-largest builder by contracted sales is among many in the sector struggling with a cash crunch amid slumping home sales worsened by the country’s rigid Covid policies. Once considered a higher-quality name with several offshore projects, Logan’s looming restructuring has become combative as some dollar bondholders organized and issued demands.
Under Logan’s draft proposal, the firm’s public notes will be fully paid in 6.75 years with the first batch of principal payments occurring 33 months after a restructuring becomes effective, said the people. Its privately placed bonds are scheduled to be paid off in five years, with the first principal payments made 30 months after restructuring, they said, adding that Logan also intends to use offshore assets to back the debt overhaul.
The draft proposal remains in discussions and is subject to revision, according to the people. Logan representatives declined to comment. REDD previously reported some of the details.
Logan’s move comes as creditors are looking increasingly impatient with Chinese developers’ generally slow progress on cleaning up their offshore debt mess after payment failures. Only a handful of firms have unveiled relatively comprehensive restructuring plans for such liabilities so far, including one by Guangzhou R&F Properties Co. to extend all its dollar bonds. Some of those who have yet to do so, from China Evergrande Group to Sunac China Holdings Ltd., are being taken to the court as creditors demand winding up their businesses if they don’t get repaid.
Logan has suspended dollar bond payments while seeking a holistic management of offshore debt. Its financial adviser, Haitong International Securities Group Ltd., earlier said the developer is planning for a so-called scheme of arrangement to handle its debt.
(Updates with bond prices, chart and background)
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