On the morning of April 8, Shimao Group released "inside information" that China Construction Bank (Asia) Corporation Limited filed a winding-up petition against the company with the High Court of the Hong Kong Special Administrative Region on April 5, 2024, involving the company's financial obligations amounting to about HK $1,579.5 million.
Shimao Group believes that the Petition does not represent the common interests of the Company's overseas creditors and other related parties. In order to protect the interests of its related parties, the Company will vigorously oppose the petition and continue to move forward with the offshore debt restructuring to maximize the value of its related parties.
On March 28, Shimao Group released its 2023 annual results. According to the report, the Group's turnover in 2023 will be approximately RMB59.464 billion, a decrease of approximately 5.7% from last year. Gross profit was approximately RMB5,848 million, representing a year-on-year increase of approximately 10.7%, and gross profit margin was 9.8%. The loss of core business attributable to shareholders was approximately RMB14.508 billion.
Behind the losses is a huge debt pressure.
According to Shimao Group's announcement on December 7, 2023, as of June 30, 2023, Shimao Group's offshore interest-bearing debt was approximately US$14 billion, domestic interest-bearing debt was approximately US$25 billion, amounts payable to related parties were approximately US$3 billion, and total equity was approximately US$9 billion, including non-controlling interests of approximately US$6 billion.
To this end, on the evening of March 25, Shimao Group disclosed the inside information of the "proposed offshore debt restructuring clause".
According to the announcement, Shimao Group seeks to restructure the overall claims of the scheme creditors, including the overall principal amount of the scheme creditors, all accrued and unpaid interest calculated at the original interest rate of the offshore debt as of the effective date of the restructuring. The scheme creditors will be provided with four options in accordance with the scheme creditor options set out in the term sheet, which are designed to meet the different preferences and needs of the scheme creditors.
The first option of the restructuring scheme is a short-term facility, in which the scheme creditor may elect to obtain a short-term instrument in the form of a short-term note or short-term loan in an amount equal to 100% of the scheme creditor's principal amount of the scheme creditor's claim. The short-term notes and short-term loans will be issued by Shimao Group with a tenor of six years and an aggregate principal amount of up to US$3 billion. Interest will accrue at the rate of 50% of the outstanding principal amount of the Short-Term Note or Short-Term Loan (as the case may be) and will be paid semi-annually as follows.
Shimao Group will also repay the Short-Term Loan on or before each Repayment Date in an aggregate principal amount equal to 50% of the principal amount of the Short-Term Loan, plus any accrued unpaid interest equal to 50% of the outstanding principal amount of the Short-term Loan as of such Repayment Date.
The second option is a long-term instrument, where the scheme creditor may elect to obtain a long-term instrument in the form of a long-term note or long-term loan in the form of a principal amount equal to 100% of the scheme creditor's claim. Long-term notes and long-term loans will also be issued by Shimao Group with a tenor of nine years and an aggregate principal amount of not more than US$4 billion. Interest on the outstanding principal amount of the long-term instrument will be accrued and paid semi-annually as follows.
The third option is the Mandatory Convertible Bonds, which are 100% of the principal amount of the scheme creditors' claim and can be converted into zero-coupon compulsory convertible bonds with a maturity of 1 year for the new shares of Shimao Group.
The fourth option is a combination of different instruments with a fixed combination of different instruments with a total principal amount equal to 100% of the principal amount of the creditors of the scheme. The fixed portfolio consists of a short-term instrument with a principal amount equal to 25% of the principal amount of creditors of the scheme, a long-term instrument with a principal amount equal to 35% of the principal amount and a mandatory convertible bond with a principal amount of 40%.
According to the annual performance report released by Shimao Group, in 2023, Shimao Group's contracted sales will be RMB42.822 billion, with a contracted sales area of 2.947 million square meters. Achieved delivery of 88 cities, 114 projects and 158 batches. At the end of 2023, the Group had approximately 280 projects with a land bank of approximately 51.05 million square meters (before equity).
As of the end of 2023, the Group's area under construction was approximately 29.77 million square meters, and the completed area was approximately 6.97 million square meters that year. Looking ahead to 2024, the Group plans to have approximately 26.7 million square meters of area under construction and approximately 4.5 million square meters of planned completion area.
According to the information on the official website, Shimao Group has entered the real estate industry since 1989, and after more than 30 years of development, it has laid out more than 100 core development cities across the country, involving real estate, commerce, property management, hotels, theme entertainment, culture and other industrial fields.