Sunac China Holdings opened as much as 20% higher in Hong Kong after clearing a major hurdle in the restructuring of $9 billion worth of debt, reports Bloomberg. The company’s shares reached HK$1.88 as of noon break on Friday, up about 6% while narrowing its 59% plunge since resuming trading in mid-April. Its offshore bonds were little changed Friday morning at around 21 cents on the dollar.
Investors holding more than 75% of its offshore debt have accepted a restructuring proposal, Sunac said late Thursday. A so-called scheme of arrangement, which Sunac expects to implement its debt restructuring through, requires the agreement by over at least 75% in value and 50% in number of creditors, according to a report by law firm Allen & Overy last year. If approved by the court, the scheme will become binding on all creditors, including those who voted against and those who did not vote at all.
“This is positive for equity, as it means Sunac is unlikely to be liquidated,” said Leonard Law, senior credit analyst at Lucror Analytics. “That said, it will be a very slow and long process for bond prices to recover.”