China ceveloper Yuzhou needs cash to proceed with restructuring

Distressed Chinese developer Yuzhou Group (1628) needs financing to press ahead with an offshore restructuring plan that received court approval last year, according to a company lawyer.

The builder will use the next six months to “shore up its liquidity in advance of making the payments due on the restructuring effective date,” Christopher Hunker, a counsel at Linklaters on behalf of Yuzhou, said during a Tuesday bankruptcy court hearing in New York.

Financing difficulties have led to delays implementing the plan, the company said earlier this month in an exchange filing. Creditors last week approved a Yuzhou proposal to extend the long-stop date — typically a deadline to meet all restructuring conditions — to Aug. 31 from Feb. 28.

Yuzhou’s case underscores the ongoing years-long slump in China’s property sector, with new-home sales remaining weak. Despite support from creditors, persistent liquidity squeezes could still prevent a developer from completing a debt restructuring. The company first defaulted on dollar bonds in January 2022.

Judge Lisa G. Beckerman called for Tuesday’s status conference because Yuzhou’s Chapter 15 case hadn’t been moving for months. Hunker said there are a number of “moving pieces” for Yuzhou’s restructuring, with one sticking point the payments that need to be made by the restructuring effective date.

The company is also working on a right issue under the debt plan, he added, as well as seeking regulatory approvals to issue new shares and bonds.

BLOOMBERG