(Yicai) Nov. 15 -- Sunac China Holdings is offering bondholders four options in a proposed plan to restructure about CNY15.4 billion (USD2.13 billion) of the major property developer’s Chinese mainland debt.

The options are cash repurchase, equity payment, asset-based debt settlement, and long-term debt extensions, the Tianjin-based company said in a statement yesterday.

If creditors accept the proposal, it is estimated that Sunac could halve its onshore liabilities, alleviating repayment pressure for the next five years and mitigating the risk of another short-term default, according to a person familiar with the matter.

By greatly paring back debt and extending the repayment period, the new plan would help Sunac repair its balance sheet and create the conditions for a recovery in its operational fundamentals, said Liu Shui, director of corporate research at the China Index Academy.

But the plan still requires creditor support and approval, so the company needs to negotiate with them to reach a consensus, Liu added.

Sunac’s shares [HKG: 1918] closed 1.5 percent lower at HKD2.60 (36 US cents) each today, while the broader Hong Kong market was little changed. The stock has climbed 73 percent since the end of last year.

Sunac’s proposal could provide a blueprint for other distressed builders, Liu also noted. Methods such as discounted buybacks and debt-to-equity swaps could lower debt at its source, giving firms time to regain value and the space to repay debt.

Between 2009 and 2014, Sunac grew quickly from a mid-sized builder into one of the top 10 in the industry, but that also brought hidden risks. After the real estate market ran into trouble, Sunac defaulted in May 2022. Last November, it completed its first domestic and overseas debt restructuring, involving about CNY90 billion.

Still, due to the unexpectedly sharp market downturn, Sunac said in its semi-annual report that it would extend the principal and interest payments on its onshore public market bonds due in June and September to the end of this year, while pushing forward with a comprehensive and long-term solution.

Editors: Tang Shihua, Tom Litting