China Evergrande Group 3333.HK will get a signal on Thursday of the level of creditor backing for its offshore debt restructuring proposal, with investors to be given an incentive for early support.

While some major creditors have already agreed to support the restructuring proposal, others are eager to cut ties with the debt-laden property developer and move on.

The nearly 200-page term sheets, which were published on March 22, gave creditors a range of choices, including swapping their debt into new notes with maturities ranging from 10 to 12 years, or converting it into various mixes of new notes with maturities ranging from 5 to 9 years and equity-linked instruments.

The group and its two Hong Kong-listed companies, Evergrande Property Services Group 6666.HK and Evergrande New Energy Vehicle Group 0708.HK, will back the equity-linked instruments.

Bondholders of notes issued by Evergrande’s offshore subsidiaries, Scenery Journey and Tianji Holding, will be able to exchange their existing debt for new notes with maturities ranging from four to eight years, with coupons beginning in the fourth year.

If creditors agreed to approve the restructuring by Thursday at 0900 GMT, they would get a 0.25% consent fee depending on the outstanding principle of their loans in the form of new notes, a date that might be extended by the firm.

Evergrande and its creditors will continue to negotiate restructuring conditions. The exact voting date will be determined later by the court and is expected to be in the third quarter. To pass, the proposal must receive support from more than 75% of creditors in each debt class.

The restructuring’s effective date is slated to be Oct. 1, while the long-stop date – beyond which the plan could lapse – is Dec. 15, though both are extensible.

The equity value of the equity-linked instruments is difficult to calculate because shares of Evergrande and its two listed units have been suspended from trading since March 2022, and they may be delisted if they do not resume trading by the end of September.

Evergrande has stated that it will require extra financing in the range of 250 billion to 300 billion yuan ($36-43 billion) as it restarts operations over the next three years.

The electric vehicle industry has also stated that if new funding is not obtained, production may have to be halted.

If Evergrande does not proceed with the restructuring plan, the developer may face liquidation proceedings in a Hong Kong court filed by an investor in one of its units.

Evergrande was created in Guangzhou in 1996 by Chairman Hui Ka Yan, and it was listed in Hong Kong in 2009.

The company expanded quickly as a result of a land-buying frenzy financed by loans and by selling units quickly at cheap margins. With $110 billion in revenue, $355 billion in assets, and over 1,300 developments nationwide, it was China’s second-largest developer in 2020.

However, Evergrande’s ranking dropped to No. 5 with $65 billion in sales in 2021, and then to No. 42 with $6.6 billion in sales in 2022 after it entered a debt crisis in the middle of 2021.

At the end of 2021, its liabilities, including payables, totaled $274 billion. It is also the sector’s largest issuer of dollar bonds. After missing multiple bond payments in late 2021, its whole $22.7 billion in offshore debt was declared in default. As credit conditions deteriorated, the crisis engulfed its peers, forcing many developers into default.

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