On 27th September 2024, CIFI Group (referred to as "CIFI") announced it had reached an agreement with its main offshore creditor group and officially presented its restructuring plan. As of the plan’s voting deadline, approximately 78% of creditors had signed the restructuring support agreement.
On 11th April 2025, CIFI announced amendments to certain terms of the restructuring plan, which became effective the same day. The bolded and italic text in this article highlights the updated content.
The reference date for all new bonds and loans is set as the earlier of the restructuring effective date or 30th June 2025.
Given the extensive terms, this text will consolidate key details and may not cover all specifics comprehensively.
(The following content serves as a reference; all details are subject to the original announcement.)
Scope of the Restructuring Plan
The restructuring plan covers CIFI's offshore bonds and loans. The bonds involved consist of ten offshore bonds issued by the company, one convertible bond, and one perpetual bond (totaling approximately USD 4.55 billion in principal and accrued interest). The offshore loans include nine bilateral loans and four syndicated loans (totaling approximately USD 2.31 billion in principal and accrued interest).
Table 1: Offshore Bonds Included in the Restructuring Plan
Bond | ISIN | Outstanding Amount |
CIFIHG 5.500% 23Jan2023 Corp (USD) | XS1750975200 | 0.3 |
CIFIHG 5.850% 19Aug2023 Corp (CNY) | XS2218700008 | 0.2 |
CIFIHG 6.550% 28Mar2024 Corp (USD) | XS1969792800 | 0.6 |
CIFIHG 6.450% 07Nov2024 Corp (USD) | XS2075784103 | 0.5 |
*CIFIHG 6.950% 08Apr2025 (HKD) | XS2466214629 | 0.3 |
CIFIHG 6.000% 16Jul2025 Corp (USD) | XS2099272846 | 0.6 |
CIFIHG 5.950% 20Oct2025 Corp (USD) | XS2205316941 | 0.5 |
CIFIHG 5.250% 13May2026 Corp (USD) | XS2251822727 | 0.4 |
CIFIHG 4.450% 17Aug2026 Corp (USD) | XS2342908949 | 0.5 |
CIFIHG 4.375% 12Apr2027 Corp (USD) | XS2280431763 | 0.4 |
CIFIHG 4.800% 17May2028 Corp (USD) | XS2342499592 | 0.2 |
**CIFIHG 11.581% PERP (USD) | XS1653470721 | 0.3 |
Total | 4.6 | |
*refers to convertible bond **refers to perpetual bond Source: Company reports, iFAST Compilations Data as of 25 April 2025 | ||
The Restructuring Plan
Outlined in the plan are five distinct options available to creditors:
Table 2: Restructuring Plan Options
Options | Instrument | Maximum Acceptance Amount | Restructuring Consideration |
1 | A: Short-term Bonds | USD 650 million (bond portion) | - 32% conversion to 2-year zero-coupon bonds or loans (extendable to 3 years) |
B: Short-term Loans | USD 350 million (loan portion) | ||
2 | A: Mandatory Convertible Bond | Unlimited | - Cash - 90% conversion to 4-year zero-coupon mandatory convertible bonds |
B: Mandatory Convertible Bonds + Medium-term Bonds | - Cash - 60% conversion to 4-year zero-coupon mandatory convertible bonds - 30% conversion to 4.5-year medium-term bonds | ||
3 | Long-term Bonds | USD 300 million | - Shared cash - Approximately 100% conversion to 6-year long-term bonds (extendable to 9 years) |
4 | A: 4.5-year Bonds | USD 650 million (bond portion) | - 50% conversion to 4.5-year new bonds (extendable to 5 years) |
B: 4.5-year Loans | USD 350 million (loan portion) | ||
5 | A: USD Long-term Loans | Unlimited | - Shared cash - Approximately 100% conversion to 6-year long-term loans (extendable to 9 years) |
B: CNY Long-term Loans | |||
Source: Company reports, iFAST Compilations | |||
In essence, creditors have the flexibility to distribute their principal among Options 1 to 5 (including options A and B within each), enabling them to acquire new bonds, mandatory convertible bonds, or loans as part of the restructuring arrangement.
If the subscription amount exceeds the limit for an option, the surplus will be proportionally reallocated to Option 2B (Mandatory Convertible Bonds + Medium-term Bonds) for bondholders and Option 5 (USD or CNY Long-term Loans) for loan holders.
Creditors who do not make an option selection within the specified period will also be automatically allocated to these Option 2A (Mandatory Convertible Bonds).
Moreover, should the subscription amount for Option 1A or 4A falls below 25% of the scale limit, the option will be voided, and creditors will be reassigned to Option 2B. Similarly, if the subscription amount for Option 1B or 4B falls below the 25% threshold, the option will be annulled, and creditors will be redirected to Option 5.
Additionally, provided that options remain active and the total subscriptions for Options 1 and 4 do not exceed the scale limit of USD 1 billion each, any unclaimed portion of option A will be reallocated to cater to any excess subscription in option B, and vice versa.
Chart 1: Option Allocation and Cancellation Mechanism in the Restructuring Plan (Before the revision, excluding Option 2A)
Option 1: Short-term Bonds or Loans
Creditors selecting this option will receive a new short-term bond or loan, equivalent to 32% of the principal amount, featuring a zero-coupon term of 2 years, extendable to 3 years at the issuer's discretion. At maturity, the issuer will redeem the bonds or repay the loans at $100.
Importantly, the issuer retains the right, by the end of the 12th month following the restructuring effective date, to redeem or repay up to 40% of the bonds or loans at a reduced value of $75. Consequently, creditors opting for Option 1 may encounter a principal reduction ranging from 68% to 71%.
Option 2A: Mandatory Convertible Bonds or Option 2B: Mandatory Convertible Bonds + Medium-term Bonds
Creditors opting for Option 2A will receive:
- Cash
- 90% conversion to a 4-year zero-coupon Mandatory Convertible Bond (MCB)
And creditors opting for Option 2B will receive:
- Cash
- 60% conversion to a 4-year zero-coupon Mandatory Convertible Bond (MCB)
- 30% conversion to a 4.5-year Medium-term Bond
Cash: The issuer will proportionally allocate a minimum of USD 35 million to Option 2 creditors (including both 2A and 2B). The cash will be distributed in three installments: (i) At least 25% will be paid on or before the restructuring effective date; (ii) 25% will be paid within 6 months after the restructuring effective date; (iii) The remaining 50% will be paid within 12 months after the restructuring effective date.
This allocation, which accounts for the reallocation of surplus funds from other bond options to Option 2 and the constraints on alternative options, indicates that creditors under Option 2 could potentially reclaim around 1% of the principal amount through this disbursement.
Additionally, if cost savings are realised during the restructuring process, the company may, in accordance with agreements with the ad hoc group of creditors, pay additional cash to Option 2 creditors.
Holders of Option 2(Regardless 2A or 2B)'s Mandatory Convertible Bonds (MCBs) can convert them into shares of CIFI Group (Stock Code: 884.HK) at a conversion price of HKD 1.6 per share, effective from the issuance date. It is worth noting that should the 90-day Volume Weighted Average Price (VWAP) reach HKD 5.0 per share, any remaining unconverted MCBs will automatically convert at this price per share.
MCB holders have the flexibility to convert their bonds into shares at any point within 4 years from the issuance date, subject to a predefined cumulative conversion ratio schedule (See Table 3):
Table 3: Mandatory Convertible Bond Conversion Schedule and Minimum Cumulative Ratios
Conversion Schedule | Minimum Cumulative Conversion Ratio (MCB Issuance Scale %) |
1st Month after Restructuring Effective Date | 20% |
From Restructuring Effective Date to 1st Year after Reference Date | 40% |
From Restructuring Effective Date to 2nd Year after Reference Date | 60% |
From Restructuring Effective Date to 3rd Year after Reference Date | 80% |
From Restructuring Effective Date to 4th Year after Reference Date | 100% |
Source: Company reports, iFAST Compilations | |
If all bondholders opt for the bond options and these options (Options 1A, 3, 4A) reach their maximum limits, the issuance principal of the convertible bonds would total approximately USD 3.06 billion. At a conversion price of HKD 1.6 per share, the Group would issue around 14.9 billion new shares, representing about 143% of the current total shares (around 10.4 billion). This implies that post full exercise of the Mandatory Convertible Bonds, shareholders could face a dilution effect of nearly 150%.
Additionally, the company has a USD 67.5 million shareholder loan that can be converted into approximately 1.32 billion company new shares at a rate of HKD 0.4 per share, which could further increase the actual dilution effect.
Considering CIFI Group's current share price of HKD 0.24 per share and the minimum conversion price, creditors may recover roughly 15% of the principal amount of the Mandatory Convertible Bonds (See Table 4):
Table 4: Estimated Principal Reduction and Recoverable Amounts of Mandatory Convertible Bonds
Conversion Price | Current Price | *Estimated Recoverable Amount (Per $100 Principal Amount) | |
Mandatory Convertible Bonds | HKD 1.6 per share | HKD 0.24 per share | $15 |
*Estimated Recoverable Amount = Current Price/ Conversion Price Source: Company reports, iFAST Compilations | |||
Option 2B creditors, in addition to the Mandatory Convertible Bonds, are entitled to receive a medium-term bond equivalent to 30% of the principal. This new bond has a 4.5-year maturity with a 2.75% coupon rate. The issuer will distribute a 0.25% cash coupon from the 2nd to the 4th years and a 2.75% cash coupon from the 4th to the 4.5th years, with the remaining interest paid in kind (PIK). The principal installment schedule for the 4.5-year medium-term bond under Option 2 can be found in Table 5:
Table 5: Option 2B’s Installment Schedule for the 4.5-Year Medium-term Bond
Time after Restructuring Effective Date | Cumulative Principal Repayment (Principal %) |
3 year | 11.7% |
3.5 year | 35.0% |
4 year | 58.3% |
4.5 year | 100.0% |
Source: Company reports, iFAST Compilations | |
In summary, using the current stock price and a conversion price of HKD 1.6 per share, Option 2A creditors will see a reduction of approximately 85% in principal, while Option 2B creditors will experience a reduction of about 51%. Due to the considerable uncertainty regarding the indirect principal reduction from convertible bonds, the actual reduction in principal may vary.
It's worth noting that Option 2B has a lower principal reduction but includes a mid-term bond, which carries default risk. Hence, each option has its pros and cons.
Option 3: Long-Term Bonds
Creditors under Option 3 are entitled to:
- Shared Cash
- Approximately 100% conversion to a 6-year Long-term Bond
A total of USD 5 million in Shared Cash will be proportionally distributed among creditors of Option 3. While Option 5 has no scale limit, assuming other options reach their scale limits, creditors of Options 3, 5A, and 5B are each expected to receive approximately 0.2% of their principal amount from the Shared Cash.
The Shared Cash for Option 3 will be paid in four installments: one-fourth will be paid in cash on the restructuring's effective date, and the remaining three-fourths will be repaid in three installments at 0.5 years, 1 year, and 2 years after the effective date.
Under Option 3, creditors are entitled to a long-term bond equivalent to around 100% of the principal, with the following considerations:
- The bond initially spans 6 years but can be extended to 9 years by the company based on sales thresholds:
- If cumulative equity contract sales from 2024 to 2029 (6 years) do not reach RMB 180 billion, the company may extend the term to 7 years.
- If cumulative equity sales from 2024 to 2030 (7 years) do not reach RMB 210 billion, the company may extend the term to 8 years.
- With agreement from over 66.7% of Option 3 creditors, the company may extend the term to 9 years.
- The bond carries a 1.0% interest rate, payable in cash. If the bond term is extended, the interest rate will increase to 1.25% for years 6 to 9.
- For the initial three years, the issuer has the option to defer the entire 1.0% annual interest until the maturity date. Subsequently, the issuer may choose to defer 0.5% of the annual interest.
- Payment frequencies switch from semi-annual to quarterly after the first 3 years.
- Principal installment schedules for the 6, 7, and 8-year terms align with the 9-year term, differing only in final principal repayments.
- The principal installment payments for the long-term bond (6-year term and the potentially extended 9-year term) can be found in Table 6:
Time after Reference Date | Cumulative Principal Repayment (Principal %) | |
6-year (no extension) | 9-year (extension) | |
3 year | 1.5 | 1.5 |
3.25 year | 4.75 | 4.75 |
3.5 year | 9 | 9 |
3.75 year | 12.25 | 12.25 |
4 year | 17 | 17 |
4.25 year | 21.19 | 21.19 |
4.5 year | 25.38 | 25.38 |
4.75 year | 29.57 | 29.57 |
5 year | 33.76 | 33.76 |
5.25 year | 39.2 | 39.2 |
5.5 year | 44.64 | 44.64 |
5.75 year | 50.33 | 50.33 |
6 year | 100 | 56.02 |
6.25 year | / | 60.96 |
6.5 year | / | 65.9 |
6.75 year | / | 70.84 |
7 year | / | 75.78 |
7.25 year | / | 80.47 |
7.5 year | / | 85.16 |
7.75 year | / | 89.1 |
8 year | / | 93.04 |
8.25 year | / | 96.98 |
8.5 year | / | 99.84 |
8.75 year | / | 99.94 |
9 year | / | 100 |
Source: Company reports, iFAST Compilations | ||
In conclusion, Option 3 offers creditors the opportunity to recover their entire principal through Shared Cash and the new bond, ensuring no principal reduction. Nonetheless, the extended term poses a higher risk of default for the group.
Option 4: 4.5-Year New Bond or Loan
Creditors opting for Option 4 can receive a 4.5-year new bond or loan equal to 50% of the principal, featuring:
- A 4.5-year term, extendable to 5 years by the company.
- At maturity, the issuer will redeem the bond or repay the loan at $100. If the term is extended to 5 years, the issuer will repay 20.9% of the principal in the 4.5th year after the restructuring effective date and the remaining 79.1% in the 5th year.
- The bond carries a 1.0% interest rate, payable in cash. If the term is extended, the interest rate will be adjusted to 0.75%.
- For the initial three years, the issuer may defer the entire 1.0% annual interest until the maturity date. During the third to fourth year, the issuer may choose to defer 0.75% of the annual interest.
Option 4 and Option 2B each feature a 4.5-year new bond, with the possibility for Option 4 to extend to 5 years with a slower principal repayment schedule. While Option 4 offers a higher 50% principal in the new bond (compared to Option 2B's 30%), Option 2B includes upfront cash and a mandatory convertible bond equivalent to 60% of the principal.
Option 5: Long-Term USD or CNY Loan
Creditors under Option 5 receive:
- Shared Cash
- Approximately 100% conversion to a 6-year USD (5A) or CNY (5B) Loan
The commercial terms of Option 5 are similar to those of Option 3, with creditors under both options receiving the same Shared Cash amount. However, the Shared Cash for Option 5 will be paid in six installments: one-sixth will be paid in cash on the restructuring effective date, while the remaining five-sixths will be repaid in five installments at 0.5 years, 1 year, 1.5 years, 2 years, and 2.5 years after the restructuring effective date.
The terms of the 6-year long-term USD (5A) or CNY (5B) loans—including the tenure, extension conditions, interest rates, principal payment amounts and schedules, Shared Cash disbursement method, and principal installment repayments—are consistent with those of the 6-year long-term bonds under Option 3. The difference lies in the structure as either loans or bonds. For details on principal installment repayments, please refer to Option 3 and Table 6.
Credit Enhancement Measures
CIFI will implement additional credit enhancement strategies for new bonds and loans, covering offshore assets, control assets within Wholly Foreign-Owned Enterprises (WFOEs), and domestic assets (See appendix). The offshore assets include specified projects like the Dacre House and Yau Tong Projects, along with intercompany loan collateral within the CIFI Group. Control assets within the WFOE structure involve share pledges or intercompany loans and collateral guarantees of specific WFOEs and their offshore holding companies in BVI and Hong Kong, as well as post-sale cash flows from particular projects. Lastly, domestic assets encompass cash flows post-sale from designated onshore projects.
Short Commentary on Restructuring Options
In a comprehensive assessment, this restructuring plan exhibits a nuanced approach, taking into consideration the diverse needs of creditors. The plan offers a range of options tailored to suit individual preferences:
- Option 1, despite entailing a substantial 70% reduction in principal, offers the shortest term, making it suitable for creditors are cautious about CIFI’s debt servicing capacity.
- Option 2 primarily consists of mandatory convertible bonds, which introduces a significant degree of uncertainty in actual returns. If the stock price remains high post-restructuring, this option will be quite attractive. Creditors who have confidence in CIFI’s stock performance may choose Option 2A, which has a higher proportion of mandatory convertible bonds.
- Options 3 (in bond form) and 5 (in loan form) do not involve principal reduction, making them attractive to creditors averse to such cuts. Notably, creditors can expect to regain around 17% of the principal during the initial four years following the restructuring.
- Option 4 includes a roughly 50% principal reduction, catering to creditors looking for medium-term bonds shielded from stock price volatility, making it a practical substitute for Option 2B.
It is essential to recognize that bonds offer superior trading liquidity and transparent secondary market prices compared to loans. Bondholders should prioritize options aligned with their bond holdings.
Given the inherent pros and cons of each option and the varying levels of uncertainty regarding potential recovery values, oversubscription may result in allocation to Options 2B or 5. Therefore, bondholders might consider selecting Options 1 to 4 concurrently to mitigate the risk of choosing unsuitable options.
Overall, CIFI's recent amendments primarily involve extending the timeline for certain cash, interest payments, and principal repayments. Additionally, the grace period for delayed interest payments has been extended to three months. This move may indicate liquidity pressures within the group, which investors should consider alongside the overall industry environment when making investment decisions.
Appendix – WFOE held Projects and Onshore Projects (Chinese Only)
WFOE held Projects and Onshore Projects |
上海LCM 置匯旭輝廣場之洋涇菜場 |
LCM 置匯旭輝廣場之S1＆S4（鉑悅濱江 |
上海恒基旭輝天地 |
上海恒基旭輝中心 |
蘇州旭輝太湖彩園 |
楊浦控江旭輝Mall |
嘉興旭輝廣場 |
長沙旭輝國際廣場 |
常德城東新區第二批次自持所在地塊 |
烏魯木齊吾悅廣場 |
長沙雨金廣場 |
昆明旭輝廣場 |
旭輝肥西Cmall |
南昌旭輝Cmall |
成都新都旭輝廣場 |
北京拱辰專案 |
淮安旭輝Cmall |
紹興旭輝Cmall |
北京瑞悅府自持商辦 |
Source: Company reports, iFAST Compilations |
