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Chinese property developer Fantasia Holdings has presented detailed terms of its offshore debt restructuring as it attempts to address about USD 4.66 billion in liabilities. The Shenzhen-based firm plans to settle creditor claims through a mix of new equity, mandatory convertible bonds and long-term secured notes. The proposal also includes conversion of a shareholder loan into equity and a fresh loan injection from its controlling shareholder. Fantasia had defaulted during the wider crisis in China's real estate sector in 2021. The restructuring plan forms part of ongoing efforts by several Chinese developers to stabilise finances and reach agreements with creditors.
Chinese property developer Fantasia Holdings has outlined a comprehensive plan to restructure about USD 4.66 billion of its offshore debt, proposing a combination of new shares, mandatory convertible bonds and long-dated secured notes to settle creditor claims. Advertisement
The Shenzhen-based developer, which defaulted during the wider debt crisis affecting China's property sector in 2021, revealed the detailed structure of the proposed restructuring in a recent statement. The company aims to stabilise its balance sheet and move closer to a settlement with offshore creditors.
As part of the proposal, Fantasia plans to allot around 5.14 billion new shares to scheme creditors at a price of HKD 1.52 per share. In addition, the developer intends to issue zero-coupon mandatory convertible bonds worth USD 501.2 million. These bonds will convert into approximately 2.57 billion shares at the same conversion price of HKD 1.52.
The restructuring framework also includes the issuance of new secured notes with long maturities. Fantasia plans to issue USD 632.5 million in secured notes due in 2031 and USD 809.6 million in notes maturing in 2034. Together, these instruments will total about USD 1.44 billion and will carry an annual coupon rate of 3%.
Another component of the plan involves restructuring an existing shareholder loan. Fantasia intends to convert the entire HKD 1.31 billion, equivalent to around USD 167.36 million, owed to its controlling shareholder into equity. This will be done by issuing about 4.38 billion new shares to the controlling shareholder at HKD 0.30 per share. The company indicated that all accrued interest on this loan will be permanently forgiven once the restructuring becomes effective.
Separately, the controlling shareholder, Baby Zeng, will provide an additional USD 6 million to the company in the form of a shareholder loan. The loan will carry an interest rate of 8% per year and will be used to cover fees and expenses associated with the proposed restructuring process.
Fantasia also disclosed that its total debt stood at around 66,972 million Chinese yuan, or roughly USD 9.71 billion, as of the end of the first half of the previous year.
The developer's restructuring effort comes as several Chinese real estate companies continue negotiations with creditors following the sector-wide liquidity crisis that began earlier in the decade. The financial stress across the industry was triggered by tighter regulatory controls on developer borrowing, declining home sales and reduced access to refinancing channels.
Over the past few years, multiple Chinese developers have pursued similar restructuring strategies, often involving debt extensions, equity conversions and new financing arrangements to manage offshore liabilities. Fantasia's latest proposal reflects the broader trend of companies seeking to reorganise debt while attempting to resume stable operations.
Source Reuters
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