- On 28 May 2025, Zhongliang Holdings announced a consent solicitation to amend part of the bond terms. Since the company has completed a restructuring back in February 2024, below updates will be based on the terms from previous restructuring. Please refer to ‘Bond Update: Zhongliang’s Restructuring Plan’ for the details.
- The coupon rate for the New Bond will be reduced from 5% to 2.5%, and the maturity date will be extended by two years to 2029. The coupon rate for Convertible Bond will be reduced from 3% to 1.5%, with the maturity date also extended by two years to 2029.
- All coupons will begin accruing from July 2027 (extended by two years), and will be paid in cash semi-annually.
- All mandatory redemption schedules for the bonds will be extended by two years.
- Other terms remains mostly unchanged.
- Bondholders who participate in the consent solicitation by 10 June 2025 will receive an early consent fee of 0.15% of principal amount in cash and 1% of principal amount in Convertible Bond (in kind); Bondholders who participate in the consent solicitation by 13 June 2025 will receive a base consent fee of 0.05% of principal amount in cash and 1% of principal amount in Convertible Bond (in kind). This consent solicitation will require 66.7% of creditors’ approval to pass, and it should be binding on all bondholders shall it becomes effective.
- As Zhongliang is facing its first cash interest payment and mandatory redemption on 1 July, we believe it is likely that the company does not have sufficient funds. Therefore, they propose this consent solicitation to extend both principal and interest payment for two years. Since the company has not made significant changes to the existing terms or adopted the common debt-to-equity conversion, the plan now is still clearly far superior to those of other developers. However, we must closely monitor whether the two-year extension period is sufficient for the company to get back on track. If the Chinese property sector continues its current trajectory, the company may still be unable to make any cash payments after two years and could face the risks of another extension.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.