Longfor Group (03380) initiates overall domestic debt restructuring, speeding up the process of debt risk resolution for real estate developers.

After obtaining extensive support for the overseas debt restructuring, Longguang is now seeking to further optimize its domestic debt management in order to better stabilize the company's production and operations and safeguard the long-term interests of bondholders. On February 27, LOGAN GROUP (03380) subsidiary Longguang Holdings Limited in Shenzhen announced that, in order to make arrangements for the subsequent payment of bonds, ensure fair information disclosure, and protect the interests of bond investors, several bonds under the company will be suspended from trading starting from February 28, 2025. This suspension affects a total of 21 domestic bonds, including "H8 Longguang 05," "H9 Longguang 01," "H9 Longguang 02," and "H1 Longguang 01." The announcement by Longguang stated that these bonds have grace period provisions, and the company will continue to communicate with investors and actively negotiate payment plans during the grace period in order to protect the interests of the company and investors. According to sources familiar with the matter, Longguang has already had preliminary discussions with investors about the restructuring plan, and the overall feedback has been positive. It is expected that Longguang will soon officially launch a formal debt restructuring plan. Investors have expressed that the proposed plan is relatively reasonable and comprehensive, and can effectively address the demands of different types of investors. Investors generally hope that the company will release the debt restructuring plan as soon as possible, and they will make a comprehensive evaluation and selection based on the various options. Diversified options and multiple resources demonstrate determination and sincerity According to media reports, LOGAN GROUP will restructure its overall domestic bonds. Journalists learned from sources familiar with the matter that Longguang attaches great importance to the redemption in the open market. This time, a comprehensive debt restructuring will be carried out with the aim of fundamentally solving the debt repayment problem in the open market for the company. This will take into account the company's current sales situation, operational condition, and fundamentals, and formulate a practical debt restructuring plan, which will reasonably reduce the debt burden to a certain extent, stabilize production and operations, fulfill the task of delivering completed buildings, and effectively resolve the debt risk in the end. An analyst from a securities institution expressed that, as the overall debt solution has not been rolled out yet, the proposed plan includes cash, assets, stocks, and other resources, which is extremely challenging for a troubled real estate company in the current difficult market environment and with limited resources for repayment, thus demonstrating the company's determination and sincerity in resolving debt risks. It is worth noting that the asset collateral arrangement provided by Longguang this time has attracted considerable attention from many investors. One investor revealed that, compared to previous arrangements where accounts receivable were used as collateral assets, Longguang has put forward real assets this time for debt repayment. Analysts believe that if this option can be successfully implemented, the company will effectively resolve the debt risk through the revitalization of assets, providing new ideas for debt restructuring for other real estate companies. Debt extension is difficult to resolve the dilemma, and it is imperative for real estate enterprises to carry out comprehensive debt restructuring Since the second half of 2021, real estate enterprises have generally encountered liquidity difficulties due to the cyclical adjustment of the industry. Prior to 2023, real estate enterprises mainly resorted to debt extensions to buy time. However, after that, the real estate market continued to experience deep adjustments, leaving many real estate companies in a difficult situation. Even for companies that completed debt extensions, many found themselves in a dilemma of repayment difficulties and difficulties in implementing the proposed solutions, making it difficult to fundamentally solve the problem of debt extensions. Huatai once pointed out in a research report that given this situation, what real estate companies need is a real debt restructuring, which can systematically and permanently resolve debt risks. Liu Shui, director of corporate research at China Index Research Institute, stated that overall debt restructuring can reduce debt from the root, help companies truly overcome debt crises, and better protect the interests of creditors. Since 2024, multiple real estate companies, including Sunac China, COUNTRY GARDEN, Times Property, SINO-OCEAN GP, and others, have announced their intentions to implement comprehensive restructuring arrangements for their domestic bonds. Longguang had previously secured a 10-month grace period for 21 domestic bonds in July 2024 and stated that it would use this period to formulate a comprehensive restructuring plan. On January 21, Sunac announced that the restructuring plan for ten bonds held by its subsidiary, Sunac Real Estate Group Co., Ltd., had been approved by the relevant bondholders' meeting, achieving a successful overall restructuring of domestic bonds totaling 15.4 billion RMB. After the completion of the Sunac domestic debt restructuring, it is expected that over 50% of the total domestic public market bonds will be reduced, the remaining bonds will have an extension period of up to 9.5 years, with no redemption pressure within 5 years. This provides a reference for other real estate companies to resolve debt risks. On February 25, SINO-OCEAN GP also announced that four of its domestic bonds would be suspended from trading, and the company would continue to communicate with investors during the grace period in order to develop and implement solutions to address the related debt issues, indicating that it will once again restructure its domestic bonds. While pushing for the restructuring of domestic bonds, Longguang has achieved a milestone breakthrough in its overall overseas debt restructuring. On February 27, Longguang announced that as of 5 p.m. on February 27, 2025 (Hong Kong time), 6.207 billion US dollars, approximately 80.8% of the total principal of the company's overseas debt, is now supported by creditors.Overall creditor support agreement.This means that the overall overseas debt restructuring of Longguang has been successfully finalized, with only the court procedures remaining to be completed, laying a solid foundation for its overall domestic debt restructuring.