Logan Group’s Restructuring Plan Gains Momentum as Creditors Approve
Defaulted Chinese developer Logan Group said creditors holding over 66 per cent of the group’s US$6.2 billion offshore debt have signed an agreement in support of its restructuring plan, a key progress in its years-long overhaul talk.
Creditors Indicate Support
The Shenzhen-based homeseller said that other creditors holding over 12 per cent of debt have indicated support, but required more time to complete their internal approval processes due to the Chinese New Year holiday, according to a Hong Kong Stock Exchange filing late on Monday (Jan 27). The early-bird deadline has been extended to Feb 12, the filing shows.
Threshold Requirement
If Logan is able to obtain such approvals, the company’s support level for the debt plan will surpass 78 per cent, meeting the minimum threshold of 75 per cent required for the execution of a restructuring arrangement in Hong Kong.
Significance of Restructuring
That would bring the tussle between Logan, which has more than 150 residential developments in China, and its creditors one step closer towards the finishing line. The builder’s restructuring process has stretched over several years, marked by periods of progress as well as setbacks.
Reduced Debt Eligibility
Logan, once the nation’s 20th-biggest builder by sales, updated its restructuring plan earlier this month. The amount of debt eligible for cash payouts to creditors has been reduced to a cap of US$787 million, from US$1.3 billion announced in January 2024.
Bondholders Support
Logan won support from a group of bondholders on the debt restructuring plan in January, after some negotiation. Prices of the company’s greenback bonds are trading at distressed levels, below 10 cents on the dollar, according to Bloomberg data.
Conclusion
The development marks a significant milestone in Logan’s restructuring efforts, bringing it closer to achieving the minimum threshold required for the execution of its debt plan. While the company still faces challenges, the momentum gained in creditor support is a positive sign for its future prospects.
Frequently Asked Questions
Q: What percentage of creditors has approved Logan Group’s restructuring plan?
A: Creditors holding over 66 per cent of the group’s US$6.2 billion offshore debt have signed an agreement in support of the plan.
Q: What is the minimum threshold required for the execution of a restructuring arrangement in Hong Kong?
A: The minimum threshold is 75 per cent.
Q: How much debt is eligible for cash payouts to creditors under the revised restructuring plan?
A: The amount has been reduced to a cap of US$787 million, from US$1.3 billion announced in January 2024.
Q: How do Logan Group’s bond prices compare to other companies?
A: The company’s greenback bonds are trading at distressed levels, below 10 cents on the dollar, according to Bloomberg data.
