Chinese property company Kaisa Group on Tuesday announced an offshore debt restructuring agreement with a key group of bondholders, swapping existing debt into new notes and shares in the company.

The Shenzhen-based developer has been working to restructure its offshore debt since defaulting on US$12 billion in offshore bonds in late 2021.

The restructuring plan also covers other debts, including loans and yuan-denominated asset-backed securities.

Kaisa is the second-largest offshore debt issuer among Chinese developers after China Evergrande Group and in 2015 became the first among its peers to default on dollar bonds.

Kaisa said in a filing it will issue six tranches of senior notes maturing from 2027 to 2032 with 5 percent-6.25 percent cash interest and eight tranches of mandatory convertible bonds maturing from 2025 to 2032, which will be converted into shares in the company based on an allocation ratio.

To facilitate deleveraging and enhance liquidity, the company added sponsors including chairman Kwok Ying-shing may contribute 115 million yuan of shareholder loan via one or more rights issue.

Kaisa may also elect to propose a management incentive plan to issue up to 3.33 percent ordinary shares of Kaisa and distributed to its personnel after a tranche of the new notes has been fully redeemed.

Kaisa is due to face a winding-up petition hearing in Hong Kong on September 9, and a debt restructuring agreement will help to push back against the petition. (Reuters)