Country Garden’s Winding-Up Hearing Postponed to January Next Year, Offshore Debt Restructuring Expected to Complete This Year

According to The Paper, Country Garden, which faces a winding-up petition from creditors, applied to the Hong Kong High Court for an adjournment of the hearing to buy more time for its offshore debt restructuring. The court approved the adjournment to January 5 next year.

Country Garden’s offshore debt restructuring plan is currently under voting, involving $14.074 billion in principal debt. Since the beginning of this year, Country Garden has sought to accelerate the restructuring process and aims to complete it by December 31, 2025.

Progress has been made toward an agreement with the bank coordination committee. It is reported that the committee requested $178 million in compensation from Country Garden, but this was opposed by an ad hoc group (AHG) of bondholders. To advance the restructuring, the group agreed to the payment terms of the compensation.

The bank coordination committee consists of seven banks, holding 48% of the existing syndicated loans. The AHG holds over 30% of Country Garden’s $10.3 billion in outstanding offshore senior notes and convertible bonds (USD bonds).

As of June 30, holders representing more than 75% of the total principal amount of the existing public notes have joined the restructuring support agreement, meaning creditors holding 75% of the USD bonds have signed on. It is reported that this 75% includes the AHG’s share.

Under the $178 million compensation plan proposed by the bank coordination committee, 50% is to be paid in cash on the restructuring effective date, while the remaining 50% will be repaid via a two-year secured loan. The Paper also learned that the negotiations were led by Bank of China and Industrial and Commercial Bank of China (ICBC).

The $178 million compensation is based on the terms of the framework agreement announced by Country Garden in January this year, which stated: "The company intends to compensate lenders under the existing syndicated loans through a combination of upfront cash and debt instruments on the restructuring effective date, in exchange for the lenders releasing their rights to certain guarantees obtained in July 2023 for the refinancing of certain existing syndicated loan debts."