China Fortune Land Development (CFLD’s) restructuring plan was approved by The High Court of England and Wales where it became effective January 31. To recall its restructuring, CFLD proposed to restructure all of its 11 dollar bonds via three new bonds and a cash repayment of 2.8%. After deducting the cash repayment, 46.7% of the principal will be exchanged into a “New Bond 1”. For the remaining part, bondholders who voted in favor of the restructuring can choose to swap to either one or both of the “New Bond 2” and “New Bond 3”. Holders who did not submit supporting votes can only choose “New Bond 2”.
All the new bonds have an 8Y maturity and a coupon of 2.5%. New Bond 1 carries mandatory debt-to-trust unit swap, while New Bond 2 is a convertible bond, while New Bond 3 is a conventional bond. CFLD issued $2.203bn of New Bond 1, $712mn of New Bond 2 and $1.931bn of New Bond 3. It also issued a $268mn zero coupon bond (ZCB) with an 8Y maturity. Proceeds from the ZCB will be used to cover accrued and unpaid interest when the convertible bond is converted to equity or if the New Bond 1 and New Bond 3 are redeemed before maturity.
