Yue Hui (00884) initiates pre-restructuring work for overseas restructuring, authorizes the issuance of mandatory convertible bonds, and reshapes the capital structure.

On October 16, CIFI HOLD GP (00884) announced the details of its overseas debt restructuring plan and the related measures the company will take. According to the announcement, the company will use the issuance of Mandatory Convertible Bonds (MCB) to significantly reduce its debt and optimize its capital structure. The major shareholder's loan of over 500 million Hong Kong dollars to the company will also be converted into shares. Additionally, the company will launch a 10-year team equity incentive plan to stabilize and motivate the team during the operational recovery period after the restructuring. These plans will seek approval at a special shareholders' meeting on October 31. On the effective date of the restructuring, CIFI's existing overseas debt of about $8.1 billion (including $6.8 billion in outstanding principal and $1.3 billion in accrued unpaid interest) will be cancelled. The company will issue new instruments totaling about $6.7 billion and pay around $9.5 million in cash. Of the new notes, about $4.1 billion will be Mandatory Convertible Bonds, while the remaining $2.6 billion will be retained in the form of short, medium, and long-term notes or loans. Specifically, the initial ordinary conversion price of the Mandatory Convertible Bonds is HK$1.6 per share, a 7 times premium to the current stock price. The conversion mechanism includes three options: voluntary conversion, staged mandatory conversion over the next four years, and trigger-based conversion if the company's stock price exceeds HK$5.0 for 90 consecutive trading days. It is worth mentioning that the major shareholder, the Lin family, has shown strong support for the company. The major shareholder's loan of over 500 million Hong Kong dollars will be converted into shares, and their existing notes of about $4 million will also be converted into Mandatory Convertible Bonds, demonstrating the major shareholder's determination to tide over difficulties with the company. In addition, to ensure stable operations and performance improvement after the restructuring, CIFI will launch a ten-year equity incentive plan covering the major shareholder and core management team. The plan will be closely tied to future quantifiable performance targets to bind the core team in the long term and restore shareholder returns gradually during the operational recovery period. The equity incentive plan also safeguards the major shareholder's control over the company post-debt restructuring to prevent excessive dilution of ownership and maintain stable corporate governance. This arrangement aligns with CIFI Holdings Chairman Lin Zhong's recent proposal of a "new development model" for the company. He emphasized that CIFI will follow a development path of "light assets, low debt, high quality" and focus on three core business sectors of "rental income, self-development projects, and real estate asset management." The aim is to develop towards a model similar to Toll Brothers or Blackstone and stand up again within three years. Industry insiders point out that from the perspective of ensuring delivery and maintaining operations, the CIFI team has shown strong resilience and execution capabilities during the industry downturn. The major shareholder's hands-on involvement in debt restructuring and operational stability are the foundations for CIFI to stand up again. Currently, CIFI's domestic reorganization has completed voting, and the convening of a special shareholders' meeting to review various matters indicates that its overseas debt restructuring has substantively begun, making the company likely to be the first private real estate enterprise to complete an overall restructuring of domestic and foreign debts.