Evergrande, a Chinese property giant, has announced plans for a restructuring of around $20 billion 16.2 billion in offshore debt, which could be seen as a model for other struggling developers.
Evergrande said in a statement to the Hong Kong Stock Exchange on Wednesday that the proposed restructuring complies with international restructuring norms and best practices.
The firm said that it would use its best efforts to restore a healthy ecosystem of capital and business, repair its capital structure and stabilise its business operations. Under the proposal, creditors will swap Evergrande bonds for new bonds and equity-linked investments backed by the company and two Hong Kong-listed subsidiaries.
The bondholders will have to get approval from other bondholders by the end of the month ahead of the restructuring on 1 October.
The company's overdue financial reports for 2021 and 2022 will be released in the coming months.
By borrowing more than $300 billion, the firm had expanded aggressively to become one of China's biggest companies.
Evergrande offered its properties at major discounts in order to make sure money was coming in to keep the business afloat. It hasn't been able to meet interest payments on its debts.
China's property market is under pressure due to a slowing economy and a serious cash crunch. It accounts for about a third of economic output in the world's second largest economy.