(Yicai) April 8 -- Shares in Shimao Group Holdings plunged today after the beleaguered Chinese property developer, which is attempting to restructure its debt, was served with a winding-up order by a creditor, which could lead to the compulsory liquidation of the company.

Shimao’s share price [HKG: 0813] closed down 18.7 percent at HKD0.37 (USD0.05). The stock has lost over 90 percent in value since July 31 last year, giving the firm a market valuation of less than HKD1.5 billion (USD191.6 million).

China Construction Bank Asia filed a liquidation petition against Shimao at the Hong Kong High Court on April 5 for failure to repay a loan worth HKD1.6 billion (USD204.3 million), the Hong Kong-based firm said today.

The winding-up petition does not represent the collective interests of the company’s offshore creditors and other stakeholders and Shimao will oppose the petition vigorously and continue to work towards an offshore restructuring to protect the interests of stakeholders, it said.

Should the court grant the winding-up order, Shimao will not be able to sell property or shares unless it obtains express permission from the high court, it added.

Last month Shimao announced a restructuring plan that would replace existing debt with new debt instruments and convertible bonds linked to the company’s stock and which is expected to slash the developer’s debt by between USD6 billion and USD7 billion.

But many creditors were not happy with the scheme, as the conversion price of HKD8.50 (USD1.09) is over 20 times Shimao’s current share price, an industry insider told Yicai.

Shimao’s net losses narrowed 2 percent last year from the previous year to CNY21 billion (USD2.9 billion), while revenue tumbled 6 percent to CNY59.5 billion (USD8.2 billion), according to the company’s annual report released on March 28.

Due to a prolonged downturn in the real estate market, Shimao had amassed liabilities of CNY492 billion (USD68 billion) as of the end of last year, with a gearing ratio, or debt-to-equity ratio, of 91 percent.

Over 20 listed Chinese developers, including China Evergrande Group, have received winding-up petitions in the past two years amid a prolonged downturn in the real estate sector. Some creditors have withdrawn their petitions after negotiations with the developers.

Editors: Dou Shicong, Kim Taylor