Core Viewpoint - Baolong Commercial (09909.HK) is facing a potential change in control due to the debt restructuring of its parent company, Baolong Real Estate, which is in a severe liquidity crisis and may sell or pledge shares to raise funds [1][3][4]. Financial Situation - Baolong Real Estate has a total debt of approximately 561.11 billion, with current liabilities reaching about 275.98 billion, and only 73.27 billion in cash, resulting in a funding gap exceeding 200 billion [4][5]. - The company has accumulated about 228.43 billion in defaulted or cross-defaulted debts, and its previous debt restructuring plan failed in February 2025, leading to creditor actions against its subsidiary [5][6]. Asset Disposal Challenges - Attempts to sell assets, such as the Shanghai Baoshan office building, have failed due to a sluggish commercial real estate market, further constraining Baolong Real Estate's financial flexibility [6]. - The company’s residential sales dropped significantly, with contract sales in the first half of 2025 at only 37.23 billion, halving compared to the previous year, making Baolong Commercial a key asset for liquidity [6]. Potential Outcomes of Restructuring - The restructuring support agreement indicates that Baolong Real Estate may transfer up to 32.4% of its shares in Baolong Commercial, potentially losing its status as the largest shareholder [7]. - There are two main paths for raising funds: selling or pledging shares to raise 40 million, or transferring a portion of shares to creditors [8][9]. Market Dynamics - The commercial real estate sector is undergoing significant restructuring, with a shift from asset sales to the reconfiguration of quality assets, as companies face debt pressures [11]. - The disparity between leading firms and smaller players is widening, with top companies like China Resources experiencing revenue growth while Baolong Commercial faces declines [11][12]. Stock Market Reaction - Following the announcement of potential share disposals, Baolong Commercial's stock price surged by 16.59%, indicating market optimism about the restructuring's potential to create a turning point for the company [13][15].