Sun 05/15/2022 21:04 PM
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UPDATE 3: 9:04 p.m. ET 5/15/2022: Sunac Real Estate Co., an indirect wholly owned subsidiary of Sunac China, announced on Friday, May 13, that it planned to repay the 10% principal payment under an extension proposal for its RMB 4 billion ($589.2 million) corporate bond “20 Sunac 01” on May 15. Since the due date fell on a weekend, the payment will be made today, May 16, confirming a prior Reorg report.

UPDATE 2: Sunac Onshore Subsidiary Readies Funds for First Installment Repayment Due Monday, May 16, Under Extension Plan for ‘20 Sunac 01’ Onshore Bond; Effort Aimed at Avoiding Onshore Default, Possible Liquidation, Ensuring Debt Repayment Ability

UPDATE 2: 12:43 a.m. ET 5/12/2022: Sunac Real Estate Co., an indirect wholly owned subsidiary of Sunac China, has raised sufficient funds for a 10% principal upfront repayment under an extension proposal for its RMB 4 billion ($594.8 million) corporate bond “20 Sunac 01” and plans to make the installment payment next Monday, May 16, according to four sources familiar with the matter.

The revelation came on the heels of Sunac - one of China’s largest real estate developers - announcing today, May 12, that it has retained Houlihan Lokey and Sidley Austin as advisors to seek a holistic solution for interest payments totaling about $140.7 million under offshore notes.

Sunac has chosen to honor the onshore bond repayment while forgoing offshore payment in an effort to prevent its onshore subsidiary from defaulting and potential liquidation by creditors, hereby ensuring its debt repayment ability, according to the two of the sources. The “20 Sunac 01” onshore bond also benefits from a guarantee from Sunac Chairman Sun Hongbin, the sources pointed out.

A company spokesperson told Reorg that Sunac is making active preparations to meet the 10% principal payment in order to avoid default and maintain the company’s operational stability in the onshore market.

As reported, holders of “20 Sunac 01” have approved a plan to extend the principal payment of the bond for 18 month, with 10% principal payment on May 15, 10% on June 30, 15% quarterly principal payment starting from Sept. 30 until June 30, 2023, and 20% principal on Sept. 30, 2023. Sun, Sunac’s chairman, has agreed to provide joint and several liability guarantees for the repayment.

In addition, Sunac has pledged its 70% interest in project company Qingdao Longyue Real Estate Co. and added as credit enhancement rights to an RMB 5 billion account receivable owed by Qingdao Longyue to Sunac (Qingdao) Real Estate. It also pledged its 100% stake in Henan Sunac Aoxin Real Estate Development Co. and a 20% stake in Henan Rongshou Xinchuang Cultural Tourism Real Estate Co.

UPDATE 1: Sunac China Seeks Holistic Solution for 4 Originally Due April 22 Interest Payments Totaling $104.7M, Says Expects No Payment Under Senior Notes

UPDATE 1: 9:00 p.m. ET 5/11/2022: Sunac China announced today, May 12, to the Hong Kong stock exchange that it is seeking a holistic solution for four interest payments totaling about $104.7 million originally due April 2022 and has appointed Houlihan Lokey and Sidley Austin as advisors.

The interest payments include $29.5 million due April 11 on its $741.6 million 7.95% notes due October 2023, $26.8 million due April 19 on its $650 million 8.35% due April 2023 notes, $20.4 million due April 20 on its $400 million 6.8% notes due October 2024, and $28 million due April 26 on its $942 million 5.95% due April 2024 notes.

A 30-day grace period for the $29.5 million interest payment originally due April 11 has expired, the announcement shows. Sunac noted that failure to cure that payment within the grace period may result in demand by the holders of the due October 2023 notes for immediate repayment of the principal and accrued interest. As of May 12, it has not received any acceleration notice from holders of the due October 2023 notes.

The company said it does not expect payments to be made under the four series and other senior notes issued by it when they become due or within the relevant grace periods.

Sunac said that since the beginning of 2022, its access to new financing has not been notably improved. Credit rating downgrades have impeded its liquidity easing efforts such as asset disposals and target financing plans. Meanwhile, contracte sales in the key first-tier and second-tier cities which form part of the company’s key layout have been significantly affected by the Covid-19 outbreak since March 2022.

The company said it will seek a holistic solution for relevant debt in order to best protect the interest of all stakeholders.

Below is Sunac China’s capital structure:
 
Sunac China Holdings - Pro Forma as of 08/31/2021
 
06/30/2021
 
EBITDA Multiple
(CNY in Millions)
Amount
US$ Amt.
Maturity
Rate
Book
 
Secured bank and other borrowings
222,157.7
34,178.1
 
 
 
Unsecured bank and other borrowings
5,909.4
909.1
 
 
 
Total Bank and Other Borrowings
228,067.1
35,087.2
 
3.5x
$650 Million 7.35% Senior Bonds Due 2021
-
-
Jul-19-2021
7.350%
 
$600 Million 7.25% Senior Bonds Due 2022
3,900.0
600.0
Jun-14-2022
7.250%
 
$600 Million 7.95% Senior Bonds Due 2022
3,900.0
600.0
Aug-08-2022
7.950%
 
$450 Million 8.35% Senior Bonds Due 2023
4,225.0
650.0
Apr-19-2023
8.350%
 
$600 Million 6.50% Senior Bonds Due 2023
3,900.0
600.0
Jul-09-2023
6.500%
 
$750 Million 7.95% Senior Bonds Due 2023
4,875.0
750.0
Oct-11-2023
7.950%
 
$650 Million 7.50% Senior Bonds Due 2024
4,225.0
650.0
Feb-01-2024
7.500%
 
$600 Million 5.95% Senior Bonds Due 2024 1
6,123.0
942.0
Apr-26-2024
5.950%
 
$500 Million 6.65% Senior Bonds Due 2024
4,030.0
620.0
Aug-03-2024
6.650%
 
$400 Milllon 6.8% Senior Bonds Due 2024
2,600.0
400.0
Aug-03-2024
6.800%
 
$750 Million 6.5% Senior Bonds Due 2025
4,875.0
750.0
Aug-03-2024
6.500%
 
$400 Million 7.00% Senior Bonds Due 2025
3,900.0
600.0
Jul-09-2025
7.000%
 
$500 Million 6.50% Senior Bonds Due 2026 1
3,900.0
600.0
Jan-26-2026
6.500%
 
Total Offshore Notes
50,453.0
7,762.0
 
4.3x
16 Rong Chuang 06
-
-
Aug-16-2021
6.500%
 
18 Rong Chuang 01 2
-
-
Aug-28-2021
6.000%
 
18 Rong Chuang 03
960.0
147.7
Oct-09-2021
7.500%
 
16 Rong Chuang 05
1,440.0
221.5
Jun-13-2022
7.000%
 
16 Rong Chuang 01
3,511.0
540.2
Jan-22-2023
6.800%
 
16 Rong Chuang 07 3
2,800.0
430.8
Aug-16-2023
4.000%
 
20 Rong Chuang 03 4
1,300.0
200.0
Sep-11-2023
6.480%
 
20 Rong Chuang 01 5
4,000.0
615.4
Apr-01-2024
4.780%
 
21 Rong Chuang 01 6
1,580.0
243.1
Jan-19-2025
6.800%
 
21 Rong Chuang 03 7
2,000.0
307.7
Apr-02-2025
7.000%
 
20 Rong Chuang 02 8
3,300.0
507.7
May-27-2025
5.600%
 
21 Rong Chuang 04 9
600.0
92.3
Jun-29-2025
7.000%
 
Total Onshore Bonds
21,491.0
3,306.3
 
4.7x
Leases
651.8
100.3
 
 
 
Total Leases
651.8
100.3
 
4.7x
Total Debt
300,662.9
46,255.8
 
4.7x
Less: Cash and Equivalents
(119,539.5)
(18,390.7)
 
Plus: Restricted Cash
22,087.6
3,398.1
 
Net Debt
203,211.0
31,263.2
 
3.2x
Plus: Market Capitalization
56,467.9
8,687.4
 
Enterprise Value
259,678.9
39,950.6
 
4.0x
Operating Metrics
US$ Amt.
LTM Reported EBITDA
64,345.6
9,899.3
 
 
Liquidity
Plus: Cash and Equivalents
119,539.5
18,390.7
 
Less: Restricted Cash
(22,087.6)
(3,398.1)
 
Total Liquidity
97,451.9
14,992.6
 
Credit Metrics
Gross Leverage
4.7x
 
Net Leverage
3.2x
 

Notes:
Sources: Reorg, Wind, company filings; Note: RMB 46.5Bn due to JVs, assocs, RMB 42.4Bn off b/s guarantee to JVs, assocs; NCI: RMB 79.9Bn
1. Issued on January 26, 2021
2. Puttable date: 24-Jan-20222
3. Puttable date: 16 Aug-2022
4. Puttable date: 11-Sep-2022
5. Puttable date: 1-Apr-2022
6. Puttable date: 19-Jan-2023
7. Puttable date: 2-Apr-2023
8. Puttable date: 27-May-2023
9. Puttable date: 29-Jun-2023
Pro Forma: For Pro forma, the proceeds from the new bonds were added to cash as the exact use of proceeds for each of the bond raised remains unclear; the repayment for matured debts were subtracted from cash as the exact source of funding used to repay the debt remains unclear
US$ Translation: CNY/USD rate used for USD conversion is 6.5.


Original Story 8:20 p.m. UTC on May 11, 2022

BREAKING: Sunac Hires Houlihan Lokey, Sidley Austin to Seek Holistic Solution to Debt, Fails to Pay $29.5M Coupon Due on $724M Due Oct 2023 Notes Within Grace Period

Relevant Documents:
Announcement

Sunac China announced today, May 12, that it had not paid the $29.5 million coupon originally due April 11 on its $742 million notes due October 2023 within the 30-day grace period, and that it has hired Houlihan Lokey as financial advisor and Sidley Austin as legal advisor to assist in assessing the group’s capital structure and its liquidity position.

More follows…
 
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