Linklaters advised ad hoc Creditors Committee on Sunac China Debt Restructuring

Linklaters advised ad hoc Creditors Committee on Sunac China Debt Restructuring

An ad hoc group of bondholders and lenders (AHG) has received legal counsel from Linklaters on a debt restructuring agreement with C, a China-based property developer listed on the Hong Kong Stock Exchange and ranked fourth by sales in 2020.

The AHG, which holds more than 30 per cent of Sunac China's offshore debt of over US $10.2 billion, was advised by Linklaters on a restructuring support agreement to facilitate the implementation of the restructuring through one or more schemes of arrangement in Hong Kong, along with recognition proceedings in other relevant jurisdictions.

As part of the restructuring, C will have the opportunity to extend the maturity of its offshore debt by up to nine years and reduce its leverage by converting some of its existing debt into a US $1 billion convertible bond, up to US $1.75 billion of mandatory convertible bonds, and 14.75 per cent of the shares of Sunac Services, as elected by the creditors.

The restructuring plan also entails equitisation of some shareholder loans, cash sweeps from onshore and offshore asset disposals, as well as strengthened governance and other information rights.

Sunac China's restructuring aims to establish a stable, long-term capital structure that safeguards value for all stakeholders. The scheme of arrangement to execute the transaction is expected to be among the highest-value schemes ever, provided enough creditor support is obtained.

The cross-border and multi-jurisdictional team at Linklaters was headed by James Warboys, a partner in the Restructuring & Insolvency practice, and was supported by Ewan Smith, an associate, and Max Krasner, a managing associate, all based in London.

Taiki Ki, a partner in the Capital Markets practice, and Mustafa Rehman and Joanne Tsoi, both associates in the Restructuring & Insolvency practice, provided support from Hong Kong SAR.

The proposed transaction is a testament to Linklaters' global restructuring capabilities in Asia and London. The firm's cross-practice team demonstrated its ability to advise ad hoc groups of creditors and coordinate complex, large-scale restructuring transactions across multiple jurisdictions.