(Yicai) Dec. 17 -- Developer China Vanke has put forward a revised plan for extending repayment of a CNY2 billion (USD280 million) note that includes additional interest payments in an effort to secure bondholder approval and stave off an imminent default after three earlier proposals failed.

The new plan would extend repayment of the bond’s principal by 12 months, with the full principal due on the new maturity date, according to an announcement posted this morning on the Shanghai Clearing House’s website by bond trustee Shanghai Pudong Development Bank.

Repayment of the bond, which fell due on Dec. 15, has a grace period of five business days to Dec. 22. It will go on accruing interest at an annual rate of 3 percent, which will be paid together with the principal at maturity, the announcement said. CNY60 million (USD8.5 million) in overdue interest will be paid by Dec. 22.

The Shenzhen-based builder also pledged to provide additional credit support for the extension, though no details were given.

Vanke’s shares remained near recent lows today. The stock [SHE: 000002; HKG: 2202] ended 0.2 percent lower at CNY4.96 (70 US cents) in Shenzhen and up 0.8 percent at HKD3.62 (47 US cents) in Hong Kong.

Bondholders will discuss the revised plan or make their own proposals at a second creditors’ meeting to be held tomorrow. Voting will close at 10 a.m. on Dec. 22. They will also discuss Vanke’s request to lengthen the grace period to 30 business days, taking it to Jan. 28.

Vanke is trying to buy time to reach a compromise with its creditors, an industry source said. If the new proposal passes, both sides will have more time to negotiate and avoid an impending default.

Vanke’s original proposal, which involved extending both principal and interest by one year without any additional credit support, failed to receive a single vote in favor during the first creditors’ meeting. Two alternative plans received support rates of 83.4 percent and 18.95 percent, respectively, both below the 90 percent approval threshold.

The developer is also seeking to delay payment of a CNY3.7 billion (USD525.1 million) note due on Dec. 28. The firm will hold a creditors’ meeting on Dec. 22 to negotiate and vote on extension details for that bond as well.

The failure to secure an extension on the CNY2 billion bond has heightened market concerns over Vanke’s willingness and ability to repay, putting additional pressure on talks for the CNY3.7 billion bond, another industry source told Yicai.

Holders of that note may demand higher risk compensation or stricter credit-enhancement measures from Vanke, leading bondholders to take a more cautious or even aggressive stance, the person added.

As of Nov. 30, Vanke had repaid CNY19.5 billion (USD2.7 billion) in Chinese public bonds this year. The builder has 13 outstanding corporate bonds and medium-term notes in the home market, worth a combined CNY20.3 billion (USD2.8 billion). It has another CNY10 billion in Chinese yuan-denominated bonds coming due between April and July next year.

Editors: Tang Shihua, Kim Taylor