(Bloomberg) -- Chinese property developer Jinke Properties Group Co. Ltd. plans to seek as early as this week court approval to undergo a “pre-restructuring” process that would lead to new shareholders, according to people familiar with the matter.
Jinke telegraphed the move in a Dec. 1 notice, filed with the Shenzhen Stock Exchange, that said it has been working with Great Wall Guofu Real Estate Co. Ltd. in restructuring after they signed a “strategic investment framework agreement.” Guofu is the real estate arm of state-owned distressed asset manager China Great Wall Asset Management.
A pre-restructuring application, which is relatively new in China, lays out details on how a debtor wants to restructure, based on required due diligence and negotiated terms with creditors. Court approval may allow Jinke to more quickly complete restructuring and possibly serve as a model for other midsize developers’ debt overhauls amid the country’s property crisis.
The application requires debtors to conduct a range of work before filing, including determining the status of debt claims and the identities of major stakeholders and would-be investors, according to the filing. It must also state that major creditors have basically agreed to restructuring terms and that those terms are feasible, it said.
Jinke is also preparing a debt restructuring plan to discuss with creditors once the court approves its pre-restructuring plan, the people said, asking not to be named because the deliberations are confidential.
The company’s filing warned that the restructuring attempt could fail and that may result in delisting of the stock. Jinke didn’t immediately reply to a request for comment. Calls to Guofu’s main line went unanswered.
In a 2022 disclosure, Jinke said it missed payment on a local bond. That was followed by a company disclosure in June that a construction firm vendor filed a reorganization petition, alleging that 27.9 million yuan of commercial bills weren’t paid.
In August, Jinke obtained shareholder approval to file a restructuring application with a Chinese court.
Jinke’s only dollar bond was trading at less than eight cents on the dollar Tuesday, according to Bloomberg-compiled data. The builder has a market capitalization at 9.6 billion yuan ($1.3 billion) based on Tuesday’s closing price, according to Bloomberg-compiled data.
--With assistance from Zhang Dingmin.
©2023 Bloomberg L.P.