China Evergrande's debt restructuring proposal receives support from creditors

China Evergrande Group, a bankrupt Chinese developer, is expected to receive support from its creditors for its proposal to restructure its offshore debt on Thursday, according to Reuters.

The good news for the developer is that major creditors have already agreed to support the restructuring proposal, while some others seek to end their relationship with the debt-laden company.

Evergrande is currently the world's largest debtor with $300 billion in debt. The result of the debt crisis over the past year has been the bankruptcy of several other Chinese developers, after which they began to try to restructure their debt.

The company's offshore dollar bonds are trading at 6.8 to 7.2 cents on the dollar, compared to a liquidation scenario rate of 2.1% to 9.3% specified in Evergrande's restructuring proposal.

Three small creditors of Evergrande and one private banker have said they disagree with the proposed terms because they are complex and unattractive.

Among the conditions of Evergrande's debt restructuring proposal is the ability to exchange all assets for new bonds with maturities of 10 to 12 years or to convert them into various combinations of new bonds with maturities of 5 to 9 years. Creditors will be paid a fee of 0.25% based on the outstanding principal amount of the debt in the form of new bills, but the deadline for their agreement is Thursday.

The actual date of the vote will be determined by the court later, most likely in the third quarter. The proposal requires the approval of more than 75% of the creditor value in each debt class.

So far, holders of offshore bonds worth 8.2 billion yuan ($1.18 billion) have not approved the offshore restructuring because less than half of the required votes have been cast, but blocking the deal is unlikely as the developer has secured the support of major bondholders, and there are relatively few votes against it.