(Yicai) Dec. 8 -- After almost one and a half years trying to restructure its offshore debt, Shimao Group Holdings, a Chinese developer of hotels, shopping malls, and high-end homes, expects a new proposal to pare its liabilities by as much as USD7 billion.

Shimao has presented to creditors its latest preliminary plan for offshore debt restructuring, the Hong Kong-based property giant announced yesterday. It involves about USD11.7 billion of debt, some of which Shimao proposes to convert into asset-backed securities and convertible notes linked to the firm’s shares.

The developer has submitted the proposal to offshore creditors and bank lenders, aiming to cut its liabilities by at least USD6 billion or by even USD7 billion to improve its financial status and business operations. The creditors have not yet agreed to the plan, it added.

Shimao said in July last year that it cannot repay its offshore debt on time, due to the sustained downturn in China’s real estate market, and would come up with a restructuring plan.

As of June 30, Shimao had USD14 billion of offshore debt and USD25 billion of onshore debt. Its cash balance was CNY22 billion (USD3.1 billion) as of Oct. 31, about 70 percent of which comes from residential property pre-sales which can only be used to develop those projects under bank supervision.

To reduce its liabilities, Shimao has been selling assets since last year, including Hyatt on the Bund in Shanghai and the Grand Victoria residential project in Hong Kong. Moreover, it rolled over about CNY18.9 billion of onshore debt in the first half, according to the firm’s interim trading report.

Shimao's net loss rose 23 percent to CNY12.1 billion in the first half from a year ago, while revenue slid 12 percent to CNY30.4 billion, the same report showed. 

Editors: Dou Shicong, Emmi Laine