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Bond Market News
Evergrande, Zhenro Update on Restructuring Plan
November 2, 2023
Evergrande has proposed a new debt restructuring plan for its offshore bondholders, as per Reuters. They are said to plan swapping its debt into a ~30% equity stake in each of its two Hong Kong-listed subsidiaries. This comes after its initial proposal did not receive sufficient support from creditors. It has until December 4 to come up with a concrete new restructuring proposal where it faces a winding-up petition in a court. Evergrande’s dollar bonds are trading at 2-4 cents on the dollar.
Separately, Zhenro Properties announced a restructuring plan for $3.9bn of its offshore debt. It plans to swap each $1,000 of debt into a combination of $33.6 of a 4Y note, $201.5 of a 5Y note, $302.2 of a 6Y note and $440.4 of a 7Y note. The coupon on the new notes are 5%, 5%, 5.5% and 6% respectively if paid in cash. It could also choose to make a payment-in-kind 100bp higher than the cash coupon. It is required to pay minimum cash coupon of 0.5% of the outstanding principal amount for the second year and 1.5% for the third year. Creditors agreeing to the plan will receive 0.15% of the principal amount and a pro rata share of $100mn of the 4Y note as a consent fee. Zhenro’s dollar bonds are trading at less than 1 cent on the dollar.
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