HONG KONG (Reuters) -Cash-strapped Chinese developer Shimao Group has proposed a two-class restructuring plan to offshore creditors to repay $11.8 billion over a period of three to eight years, according to two sources with direct knowledge of the matter and a document seen by Reuters.
Shanghai-based Shimao, which first missed a public offshore bond obligation last month, is the first major Chinese developer to kick off negotiations on restructuring terms with creditors.
China’s property sector has been hit by a series of defaults on offshore debt obligations, with three of the top five bond issuers – China Evergrande Group, Kaisa Group and Sunac China – having already defaulted on their dollar bonds. Shimao is the sixth largest issuer.
Shimao’s restructuring plan will, however, exclude $2.3 billion offshore debt including offshore project loans, and loans backed by onshore financial institutions or governed by mainland Chinese law.
Shimao did not respond to request for comment.
Unhappy about the proposal, offshore creditors plan to request Shimao to treat all classes of offshore creditors equally, and prevent capital from flowing out from the offshore entities, according to one of the sources.
Creditors also plan to ask the company for an increase in the ratio of the amortized repayment, and a sweetener to enhance the credit profile of the debt, the person said.
Debtwire first reported on Tuesday about Shimao’s restructuring terms that were communicated to some investors last Friday.