China developer Fantasia proposes new restructuring terms, shares up

By Clare Jim

HONG KONG (Reuters) – Embattled Chinese property developer Fantasia said on Monday it has entered into a new agreement with its ad hoc group of bondholders to restructure its $4 billion dollar bonds with new notes and equities.

The latest restructuring terms offered by the Shenzhen-based developer, which defaulted its offshore bonds in late 2021, were seen revised down from its first proposal published in early 2023, according to the term sheets published on Monday evening.

Cheering the restructuring agreement, shares of Fantasia jumped more than 11% on Tuesday morning, outperforming the 0.4% fall in the Mainland Properties Index.

Many Chinese property developers have defaulted since the sector slipped into a debt crisis in mid-2021 and a growing list of companies have reached restructuring agreement with their creditors.

Developers and creditors have said they expected the revamp terms to be tightened due to a worsening outlook for the county’s real estate sector.

Fantasia said in a filing on Monday it plans to swap $1.3 billion of the debt into 45.2% of enlarged shares in the company, and issue eight tranches of new notes maturing between 2026 to 2031, with cash interest ranging from 4.5% to 6.5%.

Controlling shareholder Baby Zeng will inject $6 million as a shareholder loan into the company, with an interest of 5-8% per annum, and the “new money” will fund the fees and expenses of the proposed restructuring.

The terms compare to the first proposal in which the new notes had a maturity between 2024 an 2029 and interests ranging from 5% to 8%, and Zeng and Guangdong government backed investor Gortune Alternative Fund Management were going to inject $15 million and $100 million, respectively.

Fantasia said it has gained support from the ad hoc group which held 32% of the outstanding notes, and creditors will receive a 0.1% consent fee if they support the proposal by May 21.

On Monday, Shanghai-based developer CIFI Holdings also said it has reached restructuring agreement with its ad hoc group, while Shenzhen peer Kaisa Group said it aimed to iron out restructuring terms in the coming four weeks.