- On 14 November 2023, E-House held a scheme meeting to pass the restructuring plan with a 94.1% approval. The plan was then approved by Hong Kong and Cayman courts on 23 and 24 November respectively. After that, the company has embarked on a rights issue (where existing shareholders raise fund to settle 6% of the accrued claims) and a share placement of TM Home (where there is a change of control that allows the Creditor SPV to become its major shareholder).
- However, on 1 March 2024, the company announced that due to an unsuccessful attempt to release CRIC from certain guarantee obligations provided in favor of a bank in Mainland China, the rights issue would not proceed. The restructuring plan lapsed as a result.
- E-House then announced on 2 April, that the company CEO Ding Zuyu is leading a consortium of investors to acquire 65% stakes in CRIC, with an offer price of RMB 520 million. As an affiliated person, Ding Zuyu has already resigned as the company CEO, but will remain as CRIC’s Chairman and will continue to serve as an executive director on E-House’s Board.
- Under this proposal, E-House plans to announce a new restructuring plan, which the framework includes a cash payment to bondholders equivalent to 9% of accrued claims. The restructuring support agreement will be published later, and the expected consent fee is 0.5%.
- Considering that RMB 520 million equals to approximately 10% of the principal of the USD bonds and the convertible bond, the new plan is essentially paying out the transaction amount to bondholders. Given that creditors also supposed to effectively acquire 65% stakes in the original plan, the new plan is akin to successfully finding an investor for CRIC. The offer price is roughly a 41% discount to the third-party valuation in April last year (when CRIC was valued at around RMB 1.37 billion).
- Compared to the original plan, the new plan looks less attractive because creditors are not able to receive the 6% upfront payment following the rights issue. However, it is difficult to comment at this moment because we are unclear whether the new plan will also include the remaining 35% shares of CRIC (the guarantee obligations should be yet to resolve), and how will it deal with the shares of Tmall Home and Leju.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in EHOUSE 7.625% 18Apr2022 Corp (USD), and the analyst who produced this report holds a NIL position in the abovementioned securities.
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