Sunac Rolls Over USD1 Billion of Debt as Chinese Developer Stays Sanguine About Future
Liao Shumin
DATE:  Dec 09 2022
/ SOURCE:  Yicai
Sunac Rolls Over USD1 Billion of Debt as Chinese Developer Stays Sanguine About Future Sunac Rolls Over USD1 Billion of Debt as Chinese Developer Stays Sanguine About Future

(Yicai Global) Dec. 9 -- Sunac China Holdings has successfully postponed the repayment of CNY7.6 billion (USD1 billion) of debt and the troubled Chinese developer is optimistic about paying off the rest of its liabilities through asset sales and future income and returning to a healthy development track.

Sunac has rolled over CNY5 billion (USD719.1 million) worth of onshore and offshore debts and CNY2.6 billion in loans, the Tianjin-based developer said in its long-delayed 2021 earnings report released today.

Sunac held USD11 billion in offshore debt as of June 30 this year, just under a third of which was originally due to mature before the end of this year. It continues to engage with holders of senior notes and other offshore debts, worth CNY9.1 billion (USD1.3 billion), on the restructuring of this debt, according to the first of two filings of its 2021 financial results on the same day.

These offshore creditors have set up an ad hoc group which controls more than 30 percent of the aggregate principal, it said. The developer is proposing to convert around USD3 billion and USD4 billion of this debt into common stocks or equity-linked instruments to realize sustainable capital structure.

“We believe that with the continued positive growth of China’s economy and the intense implementation of supportive policies as well as by relying on our solid asset quality and competitive advantages accumulated over many years, Sunac will complete its debt restructuring and return to a healthy development track in 2023,” the company said in its second filing.

The firm will consider gradually disposing of some of its assets over the next seven years or so, which could boost liquidity by CNY60 billion (USD8.6 billion).

And cash flow from future projects could generate cash flow of CNY320 billion (USD46 billion) in the next seven years, around 20 percent of which will be made available to pay off debts, Sunac said.

The firm might swap residual existing debt into new US dollar-denominated public notes with maturities ranging from two and eight years to provide it with more time to restore its operations and improve liquidity, it said. Interest on the new notes can be accrued in the first two years then paid back in cash afterwards.

The sluggish real estate market has made financing difficult for Sunac. Its property business had a cash balance of CNY120 billion (USD17.3 billion) as of June 30, of which the consolidated cash balance came to approximately CNY41 billion. Most of this is held in monitoring accounts at the project-level.

Sunac also released its long-delayed 2021 annual results. The developer logged a net loss of CNY38.2 billion (USD5.5 billion) last year, compared to profit of CNY35.6 billion in 2020, while revenue slumped 14 percent year on year to CNY198.4 billion (USD28.5 billion). As of the end of 2021, it had an asset-to-liability ratio of 67 percent with net assets of CNY124.7 billion, a gain of 49.1 percent from a year earlier.

Editor: Kim Taylor

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Keywords:   SUNAC China,Debt Restructuring