(Yicai Global) July 3 -- Property developer China Aoyuan Group has reached an agreement with creditors holding about 33 percent of its outstanding offshore debt on the key commercial terms of a proposed debt restructuring plan.

The plan aims to “provide the Group with a sustainable capital structure so that it will be able to address the industry-wide challenges faced by it in the immediate to medium term and deliver long-term value for all of its stakeholders,” the Guangzhou-based firm said in statement on July 2.

The plan needs to be approved by a majority of creditors, representing at least 75 percent in value, of those present and voting at the scheme meeting, the company noted.

As of the end of last year, Aoyuan had offshore interest-bearing liabilities of about CNY42.8 billion (USD5.9 billion) and onshore interest-bearing liabilities of around CNY66.2 billion (USD9.14 billion).

Under the terms of the restructuring plan, Aoyuan unit Add Hero Holdings will issue three tranches of new debt instruments worth a total of USD1.8 billion, with annual interest rates of 7.5 percent to 8.8 percent, the parent company noted. The first will start amortizing from September 2026, and the last will mature in September 2031.

Aoyuan will also issue USD500 million of 5.5 percent interest bearing notes, expected to mature in September 2031, and USD143 million new zero-coupon mandatory convertible bonds, which will be converted into ordinary shares in September 2028, representing 29.9 percent of the total issued share capital of the company after the restructuring, it added.

Moreover, Aoyuan will transfer 1 billion newly issued ordinary shares and 400 million shares owned by its founder and Chairman Guo Ziwen to some eligible creditors. The shares represent 25.2 percent and 10.1 percent, respectively, of the company’s total post-restructuring, Aoyuan pointed out.

Finally, the builder will issue USD1.6 billion new perpetual securities with a cash distribution rate of no less than 1 percent a year after September 2031, Aoyuan said.

Aoyuan had 267 property development projects with a total gross floor area of about 30.8 million square meters as of Dec. 31. The projects are expected to generate an unlevered cash flow of about CNY64.3 billion over the next 10 years.

Aoyuan said its property sales totaled about CNY7.5 billion (USD1 billion) in the first half of the year, with sales and average prices steadily increasing.

Editor: Futura Costaglione