Core Viewpoint - The restructuring of Baolong Real Estate's offshore debt marks a critical breakthrough after the failure of the initial restructuring, with the controlling Xu family striving to maintain control over Baolong Commercial amidst liquidity challenges [1][3]. Debt Restructuring Progress - On October 10, Baolong Real Estate entered into a restructuring support agreement with a creditor group holding 31% of the planned debt, indicating progress in the second round of debt restructuring [1]. - The restructuring plan involves Baolong Real Estate transferring up to 32.4% of its shares in Baolong Commercial to creditors as part of a debt-for-equity swap, which would reduce its stake from 63% to below 30.6% [2][5]. Financial Background - Baolong Real Estate has faced significant debt issues, including a default on $21.29 million in 2022 and a subsequent interest default at the end of 2023, leading to the current restructuring efforts [3]. - The restructuring framework approved by the court in 2024 was rendered ineffective in February 2025 due to a rejected extension request, resulting in a liquidation application for its subsidiary Baolong Viking involving $199 million in unpaid senior notes [3]. Restructuring Plan Details - The restructuring plan includes a "menu-style" solution with various options: cash payments up to $40 million, share transfers, issuance of up to $1.2 billion in mandatory convertible bonds, and new medium and long-term notes totaling up to $500 million [4][6]. - A cash consent fee of 0.15% has been set to encourage creditor support, with a deadline of November 28, 2025 [4]. Performance Comparison - Baolong Commercial, as a key asset, reported cash and bank balances of 4.285 billion yuan and a revenue of 1.3 billion yuan in the first half of the year, with a 52.8% increase in operating cash flow [4]. - In contrast, Baolong Real Estate's contract sales plummeted by 50% to 3.723 billion yuan, with total debt around 56.111 billion yuan and a cash shortfall exceeding 20 billion yuan [4]. Control Dynamics - Despite the share transfer, the Xu family retains control over Baolong Commercial through indirect holdings, ensuring continued influence over the company [5]. Industry Context - The restructuring reflects a broader trend in the real estate sector, where companies are moving from asset liquidation to restructuring quality assets as a means to regain creditor trust [8][9]. - As of August 2025, 20 distressed real estate firms have completed debt restructuring, with a total debt relief exceeding 1.2 trillion yuan, indicating a shift towards debt-for-equity swaps as a common strategy [9]. Future Outlook - The success of Baolong Real Estate's restructuring will depend on its ability to leverage Baolong Commercial's strong performance to restore cash flow and operational viability [8]. - The industry faces a significant debt repayment peak in 2025, with a total of 534.2 billion yuan due, highlighting the ongoing challenges for real estate firms [8].
欲“割肉”32.4%商业股权，宝龙境外债二次重组获关键进展