Sidley represented China Fortune Land Development Co., Ltd. (“CFLD”) in the restructuring of its US$4.96 billion offshore debt by way of English scheme of arrangement. CFLD is a leading new industrial city operator in China.
The complex transaction was sanctioned by the English court on January 24, 2023, which is binding on all of the bondholders. As a packaged solution to its financial risk of offshore debt distress, the court decision marks the official approval of CFLD’s offshore debt restructuring plan. The transaction closed on January 31, 2023.
Of those present and voting at the scheme meeting, scheme creditors holding 97.90% of the aggregate amount of scheme claims voted in favor of the scheme of arrangement. According to the offshore debt restructuring plan, all the existing bonds are extended for eight years, and the new bonds bear interest at 2.5% per annum, payable at maturity. Each scheme creditor was issued a series of new bonds partially convertible into units of an onshore property trust with a specified asset sale undertaking. In addition, each scheme creditor was offered to select from combinations of a series of straight bond and another series of new bonds convertible into equity interest in an onshore business portfolio.
This landmark deal is the largest offshore restructuring transaction completed by Chinese companies in recent years and is the first English scheme of arrangement of a Chinese real estate business in the current wave of companies in the sector seeking large-scale debt restructurings of offshore liabilities. It is also the only successful restructuring transaction to date with a debt-to-equity swap element.
The Sidley team was led by partners Renee Xiong and Mark Knight. Other team members included:
- Capital Markets team: senior managing associate Jacob Zhao, managing associate Congsi Wu, and associate Yaomin Pan.
- Restructuring team: partners Jifree Cader and Gordon Davidson, lead managing associate Raveena Channa and managing associate Dylan Rogers, associates Angad Sethi and Tom Burke, and trainee solicitor Abdullah Shah.
- Litigation team: partner Matthew Shankland, senior managing associate Sarah Lainchbury, and trainee solicitor Victor Pianowski.