Sunac
Sunac China Holdings Limited has successfully completed the restructuring of its USD 9.6bn offshore indebtedness
Company Advisor
Houlihan Lokey is pleased to announce the successful restructuring of c. USD 9.6 billion offshore indebtedness issued by Sunac China Holdings Limited (Sunac), which was implemented via a HK scheme. The transaction comprises a full equitization of the company’s offshore indebtedness, as well as a shareholding structure stability arrangement (SSSA) and an employee stock ownership plan (ESOP) to maintain the stability of the business. Houlihan Lokey was reappointed as the financial advisor to Sunac following the successful completion of the first offshore restructuring in November 2023.
Sunac is an HKEX-listed (1918.HK) property developer headquartered in Tianjin, China. It was historically considered China’s third-largest real estate developer by contracted sales, with more than 124 million square meters of land bank as of June 2025. In addition to its property development business, the company also engages in property management businesses through its majority-owned subsidiary Sunac Services Holdings Ltd.
Since the second half of 2021, a significant structural decline in China’s property market has placed considerable strain on Sunac’s liquidity and debt-servicing capability. In November 2023, Sunac completed a holistic restructuring involving a partial debt-to-equity swap and extended maturities. However, in the absence of the market recovery, the company continued to struggle with the upcoming interest payment obligations. The situation escalated in January 2025, when a private debt holder filed a winding-up petition against Sunac, accelerating the need for a second restructuring.
In December 2024, Houlihan Lokey was reappointed by Sunac as its financial advisor to structure, negotiate, and implement a consensual restructuring to fully address its outstanding offshore indebtedness. Having established trust with the key creditors during the first offshore restructuring, Houlihan Lokey managed to engage in direct negotiations with creditors who collectively hold approximately 26% of the offshore debts. After constructive negotiations, a restructuring support agreement was reached with the key creditors and announced to the market on April 17, 2025.
The restructuring plan contemplates a full equitization of Sunac’s approximately USD 9.6 billion offshore indebtedness to preserve the company’s going-concern value while providing creditors with the opportunity to benefit from potential future equity upside as the business recovers. The plan also introduced an SSSA and an ESOP to maintain the stability of the business and maximize long-term value for all stakeholders.
Key economic terms of the transaction included:
- USD 9.6 billion of debt claims up until June 30, 2025 (except for any default interest) converted into short-term mandatory convertible bonds (New MCB 1) and/or long-term MCBs (“New MCB 2,” together with New MCB 1, the “New MCBs”).
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- USD 7.3 billion of New MCB 1 can be converted into shares of the company anytime at a conversion price of HKD 6.80 per share, with mandatory conversion at maturity after six months (including USD 0.1 billion of consent fees).
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- USD 2.4 billion of New MCB 2 can be converted into company shares starting 18 months after RED, at a fixed conversion price of HKD 3.85 per share. If bondholders do not convert earlier, the bonds will automatically convert into shares at maturity (2.5 years after issuance).
- An SSSA to maintain a stable shareholding structure by allocating 23% of New MCBs to the substantial shareholder, resulting in a 21.8% shareholding for the substantial shareholder after the restructuring.
- An ESOP capped at c. 7% of the company’s fully diluted shares as the supplementary remuneration and incentive to the key employees is crucial to the business’s turnaround.
Creditors representing approximately 98.5% in number and 94.5% in value of the voting scheme claims voted in favor of the scheme of arrangement in Hong Kong SAR, which was sanctioned on November 5, 2025. The restructuring became effective on December 23.
The Sunac transactions are some of the largest and most high-profile restructuring transactions both in China and APAC, as (i) Sunac is the first large Chinese real estate developer to have successfully completed a holistic offshore restructuring that results in a full deleveraging in its offshore capital structure (USD 13.5 billion of offshore debt was reduced across both transactions) and (ii) the transaction involves the first use of innovative restructuring tools in Asia, such as the MCBs, SSSAs, and ESOPs, serving as a groundbreaking precedent for other struggling Chinese developers.