Sunac China plans to issue mandatory convertible bonds and adopt a team stability plan

According to the announcement from Sunac China (01918), as of the date of the announcement on June 24, 2025, approximately 75% of the total outstanding principal of existing debts held by consenting creditors have joined the restructuring support agreement. The consenting creditors who have joined the restructuring support agreement have committed to taking all necessary actions, including voting in favor of the plan at the scheduled meeting regarding the total outstanding principal of all existing debts they hold as of the record date.

The scope of the restructuring includes the offshore debts issued or guaranteed by the company, with an estimated debt claim amount (including principal and accrued unpaid interest, but excluding default interest) totaling USD 9.552 billion as of June 30, 2025, subject to review and determination by the plan administrator. The restructuring will involve the release of the company's debts as well as certain obligations of other entities within the group.

Issuance of Mandatory Convertible Bonds under Special Authorization

As consideration for the cancellation of existing debts and the release of related creditor rights associated with existing debts, two series of mandatory convertible bonds (as restructuring consideration) will be distributed to the plan creditors under the constraints of the equity structure stabilization plan. The total principal amount of Mandatory Convertible Bond 1 and Mandatory Convertible Bond 2 shall be equivalent to the total amount of claims of all plan creditors. Subject to the terms of the restructuring and applicable laws and regulations, plan creditors may choose Mandatory Convertible Bond 1, Mandatory Convertible Bond 2, or a combination of both.

In addition, subject to the terms of the restructuring support agreement, the early bird consent fee or base consent fee (if applicable) received by the relevant consenting creditors under the restructuring support agreement will be paid in the form of Mandatory Convertible Bond 1 at face value on or before the effective date of the restructuring. The consent fee is not subject to the equity structure stabilization plan.

Related Issuance of Mandatory Convertible Bonds

(1) Issuance of Mandatory Convertible Bonds to Sunac International (as plan creditors)

As of the date of this announcement, Sunac International is the holder of the Mandatory Convertible Bonds of Sunac International. Therefore, similar to other holders of existing debts, the Mandatory Convertible Bonds held by Sunac International will convert into Mandatory Convertible Bonds during the restructuring according to the selection and allocation mechanism.

(2) Issuance of Mandatory Convertible Bonds to Mr. Sun Hongbin under the equity structure stabilization plan

To 1) maintain equity structure stability; 2) ensure that Mr. Sun Hongbin can continue to contribute value to the group's delivery assurance, debt risk resolution, and long-term business recovery; and 3) consolidate confidence among all parties and better integrate resources, it is proposed to allocate conditional restricted shares to major shareholders or their designated persons through the restructuring to maintain Mr. Sun Hongbin's and/or his designated persons' equity ratio at a certain level. Specifically, under the equity structure stabilization plan, for every USD 100 principal of Mandatory Convertible Bonds allocated to plan creditors (excluding those belonging to Sunac International), USD 23 of Mandatory Convertible Bonds will be issued to Mr. Sun Hongbin or his designated persons.

Adoption of Team Stabilization Plan

As stated in the announcement dated April 17, 2025, the group continues to promote delivery assurance, debt risk resolution, asset revitalization, and long-term operational recovery and performance, which requires a stable and capable team to fully commit, actively engage, and continuously contribute and create value Considering the urgent need to stabilize the team and the uncertain and insufficient funding sources for future employee salary payments, the Group intends to adopt a team stabilization plan. Under this plan, the Group will grant shares to selected employees as a long-term supplementary source of compensation through the allocation and issuance of new shares in accordance with the listing rules. At the same time, the team stabilization plan aims to incentivize the grantees to continue contributing to the Group in the future, promoting the Group's ongoing operations and long-term business recovery and development.

Proposal to Increase Authorized Share Capital

The Board of Directors proposes to seek shareholder approval at a special general meeting by ordinary resolution to increase the authorized share capital from HKD 1.5 billion (divided into 15 billion shares) to HKD 3 billion (divided into 30 billion shares) by the creation of an additional 15 billion unissued shares, which will rank equally in all respects.

To facilitate the transactions proposed under the restructuring, including the issuance of mandatory convertible bonds (including related mandatory convertible bonds) and the adoption of the team stabilization plan, and considering that the Company's authorized share capital is insufficient to cover the number of new shares proposed to be issued under the aforementioned transactions as of the date of this announcement, as well as to provide more flexibility for the Group's subsequent business development and future fundraising, the Board of Directors recommends increasing the authorized share capital. The Board believes that increasing the authorized share capital is in the overall interest of the Company and its shareholders