Longfor (03380) has made significant progress in the overall restructuring of its overseas debts and has obtained support from numerous creditors.

On January 6, 2025, LOGAN GROUP (03380) announced that significant progress has been made in the overall restructuring of its overseas debts, launching a comprehensive restructuring plan for its overseas debts that has reached agreements with several overseas creditors. The announcement stated that in the just passed year of 2024, the Chinese real estate industry still faced a severe operating environment, with sluggish sales, significant asset devaluation, further exacerbating the company's operating costs, business operations, and debt repayment pressures. Considering the current market conditions, the company's business performance, and projected cash flow, the company has extensively contacted overseas creditors on the overall restructuring plan, reaching agreements with several overseas creditors on the terms of the overall restructuring plan for the relevant overseas debts, in order to protect the interests of all stakeholders while meeting the current business and operational realities faced by the company. A source close to LOGAN stated that the company had received many suggestions and requests from creditors, hoping that the company would complete the restructuring and launch the transaction as soon as possible. The company considered and accepted the interests and demands of the creditors, with many creditors expressing clear support for LOGAN's debt restructuring plan during the communication process. The overall restructuring plan aims to reduce the company's debt burden, restore its capital structure, promote the normal operation of its internal production and operation, thereby unleashing the potential value of its assets and protecting the interests of stakeholders. Since the overall restructuring plan has now been implemented, the company will soon release relevant announcements inviting overseas creditors to join the comprehensive creditor support agreement to quickly implement the overall restructuring plan, ensuring the protection of the interests of all overseas creditors and other stakeholders. The restructuring plan disclosed in the announcement includes four options provided by LOGAN: cash purchase, a combination of short-term notes and mandatory convertible bonds, mandatory convertible bonds, and long-term notes. The total outstanding principal of the overseas debts is approximately US$8.038 billion, with the total outstanding principal of the overseas debts involved in the overall restructuring plan approximately US$7.562 billion. Option one is a cash purchase, with LOGAN proposing to exchange $15 in cash for every $100 of the existing note principal. This is the only real estate company in the market offering a direct cash option, with high certainty and a premium compared to the bond secondary market prices. In option two, LOGAN plans to issue 5-year short-term notes, with repayment of principal starting in the third year and an additional 1% upfront fee for the short-term note principal. The proportion of holding short-term notes under this option is reasonable, with high-quality overseas projects providing cash flow support for debt repayment and strong certainty. Mandatory convertible bonds allow investors to convert and cash out timely, increasing the attractiveness of the option. Option three is the full conversion of mandatory convertible bonds, with a conversion price of HK$6. Based on the current market price of HK$1.02 per share, LOGAN's mandatory convertible bonds have a conversion price multiple of 5.8 times, better than the average level of other peers (based on the average multiple of the conversion price announced in the plan divided by the closing price of the stock on the day before the announcement). After the successful restructuring, the company's debt burden would reduce, and business operations could continue stably, potentially leading to a further increase in the stock price. In addition, the convertible bonds have a term of 2 years, providing creditors with flexibility in conversion and sale. The fourth option is a non-debt reduction option, issuing 10-year long-term notes to provide institutional investors with non-debt reduction options, meeting the requirements of different investors. Starting from the sixth year, there would be principal amortization, with added asset enhancement and fund aggregation, providing greater overall value protection. Analysts point out that due to its high-quality overseas assets and cash resources, LOGAN's overseas debt repayment resources include cash, overseas projects, and stocks, making it one of the real estate companies with high overseas resources value among those that have announced restructuring plans, with high certainty in repayment resources. In August of the previous year, LOGAN successfully completed refinancing for its Hong Kong Yau Tong project, laying a solid foundation for the smooth sale of the project and providing reliable support for the feasibility of LOGAN's overall restructuring plan. The plan embodies fairness, justice, and protection of the interests of all stakeholders for long-term benefits. LOGAN has always prioritized the interests of all creditors, treating them fairly and justly. In the current challenging operating environment, LOGAN has undergone multiple rounds of improvement and optimization in its overseas restructuring plan, utilizing all available resources to provide a high-value restructuring plan for all overseas creditors. Analysts believe that, given the current industry situation, overseas creditors' attitudes towards debt restructuring for real estate companies have undergone significant changes, with creditors' expectations gradually returning to reality. As long as real estate companies show sincerity in debt restructuring, utilize available resources, and treat creditors fairly and justly, creditors tend to provide support. Therefore, most creditors are more concerned about the completion time of the debt restructuring process compared to the specific details of the plan. The announcement stated that the comprehensive restructuring plan outlined in the terms list represents a rational and realistic solution for the restructuring of overseas debts, aiming to ensure that the company continues as an ongoing enterprise, realizing the overall long-term interests of its stakeholders. Since facing temporary liquidity pressure, LOGAN has been actively responding to challenges through various measures such as accelerating sales receipts and reducing operational expenses, focusing on stable operations and delivery commitments. In 2024, despite various pressures, the company fulfilled its delivery commitments by completing a total of 28,000 units throughout the year, demonstrating its corporate responsibility. In September 2024, the central and local governments introduced a series of favorable policies for the real estate market, leading to a trend of stabilization and recovery in the overall real estate market. Once the restructuring is successful, it will have a positive impact on the company's future operations, project development, and delivery commitments, truly protecting the long-term interests of all creditors and investors.