Three-year Arduous Journey of Offshore Debt Restructuring: KW Gproperty Still 10% Short of Passing the Threshold

After three years of struggles, Kwok Tai Fook's offshore debt restructuring has once again achieved substantial progress.

On July 13, Kwok Tai Fook Group announced that holders representing approximately 66.49% of the total outstanding principal of the debts within the scope have joined or agreed to join the Restructuring Support Agreement. This figure is less than 10 percentage points short of the 75% approval threshold from scheme creditors required for the offshore debt restructuring plan to be submitted to the court for approval.

For a real estate enterprise that fell into debt default back in 2023, this has been a thorny three-year journey.

From the first emergence of liquidity crisis to the current situation where more than half of the holders have joined or agreed to join the Restructuring Support Agreement, Kwok Tai Fook's debt resolution process in 2026 is accelerating.

However, the winding-up petition hearing against the company still exists. After several adjournments, the hearing has been further postponed to December 14, 2026.

Kwok Tai Fook still has 5 months to secure the support of remaining creditors and push forward with subsequent procedures.

"The Final Push"

According to available information, the total principal of Kwok Tai Fook's offshore debts urgently awaiting restructuring is approximately USD 4.833 billion, including USD 3.956 billion in senior notes, USD 380 million in syndicated bank loans, and USD 497 million in liabilities under other loan facilities borrowed or guaranteed by the company.

In February 2026, after reaching a principled agreement with the ad hoc group of noteholders, the company announced the specific plan for its offshore debt restructuring.

Under the agreement, the plan offers creditors two economic options. Under Option One, for every USD 100 of the principal amount of the applicable debts held by a creditor, USD 0.87 will be converted into cash, USD 29 will be converted into zero-coupon exchangeable notes that entitle holders to economic benefits from the property development project at Ap Lei Chau, Hong Kong, namely the luxury residential project "THE CORNICHE", another USD 20 will be converted into zero-coupon mandatory convertible bonds, and all the remaining principal will be written off. The maximum distributable principal cap under this option is USD 1.38 billion.

Option Two is more straightforward: creditors will convert 100% of the principal of their held debts into mandatory convertible bonds, which can be voluntarily converted into newly issued shares of the company at a conversion price of HKD 1.55 per share.

As a supporting measure for the restructuring, Kwok Tai Fook will conduct a rights issue to raise no more than USD 17.15 million. Kong Kin Man, Chairman of the company's board of directors, and his family members have undertaken to subscribe for no less than USD 10 million of the rights issue shares.

The THE CORNICHE project at Ap Lei Chau, Hong Kong, is the most significant credit enhancement measure in this plan. In February 2017, the consortium of Kwok Tai Fook and R&F Properties won the bid for the site at a consideration of over HKD 16.85 billion, with a floor price of approximately HKD 22,118 per square foot, which once set a new record for residential land auctions across Hong Kong.

THE CORNICHE has always been regarded as one of Kwok Tai Fook's core offshore assets. According to the original plan, THE CORNICHE has a buildable gross floor area of over 762,000 square feet, offering 295 units with a total estimated sales value of over HKD 30 billion. It is reported that approximately 97 units of the project have been sold cumulatively so far.

In August 2024, Kwok Tai Fook and R&F Properties managed to secure a USD 1.05 billion refinancing, successfully fending off a consortium led by CK Asset Holdings and retaining control of the project.

Currently, the 66.49% approval rate obtained by Kwok Tai Fook is still some distance away from the statutory threshold of 75%. However, past cases show that once a plan receives initial approval from key creditors, a "snowball effect" often occurs in subsequent support rates. The 66.49% approval rate should have crossed the critical point of "from quantitative change to qualitative change" in the restructuring process.

In recent years, real estate enterprises that have completed offshore debt restructuring have generally achieved creditor approval rates far exceeding the minimum requirement of 75% in the end.

For example, in Country Garden's offshore debt restructuring with a total amount of approximately USD 17.7 billion, the approval rate in the syndicated loan group was 83.71%, and the approval rate in the US dollar-denominated debt and other creditor groups reached as high as 96.03%;

At the scheme meeting for Sunac China's offshore debt restructuring, 1,492 creditors participated in the vote, and 1,469 cast affirmative votes, accounting for 98.5% of the total number of participants; at the creditor meeting for Cifi Holdings, 1,236 creditors holding a total principal of USD 7.351 billion voted in favor, with an approval rate of 92.66%.

Three Years of Thorny Journey

In May 2023, Kwok Tai Fook officially fell into debt default due to a 6.0% senior note maturing in 2024. Over the following three years, this real estate enterprise that once ranked among the "100 Billion Club" embarked on a path of self-rescue.

Affected by the general environment, the shrinkage on the sales side is the most intuitive source of pressure. In 2023, Kwok Tai Fook recorded a full-year pre-sales amount of RMB 25.243 billion, corresponding to a pre-sales gross floor area of 1.3792 million square meters; in 2024, the pre-sales amount dropped to RMB 10.201 billion; the 2025 figure further decreased to RMB 7.028 billion.

As a result, Kwok Tai Fook's revenue in 2024 was approximately RMB 11.062 billion, with an annual loss of approximately RMB 8.151 billion.

In 2025, the company's revenue further dropped to RMB 6.762 billion, a year-on-year decrease of 38.87%, and the net loss attributable to shareholders amounted to RMB 3.27 billion. At the end of the same period, Kwok Tai Fook's total liabilities stood at RMB 140.9 billion, with an asset-liability ratio of 95.5%.

Meanwhile, the scale of interest-bearing liabilities was approximately RMB 80 billion, the cash on the books was only RMB 2.2 billion, the short-term debt coverage ratio was merely 0.04, and the cash reserves were insufficient.

Entering 2026, the sales situation remained under pressure. As of the end of June 2026, Kwok Tai Fook's cumulative pre-sales amount from January to June was RMB 2.23 billion, a year-on-year decrease of 36.4%, corresponding to a pre-sales gross floor area of approximately 91,000 square meters.

Faced with the pressure on the sales side, Kwok Tai Fook had to seek solutions from the asset side.

In fact, in March 2025, in its announcement regarding offshore debt restructuring, Kwok Tai Fook mentioned that the company had planned to gradually dispose of some of its investment properties and hotels from 2024 to 2029.

Since 2026, Kwok Tai Fook has also pushed forward several asset disposal initiatives. These include exiting the old village redevelopment project at Jicun Village, Tianhe, Guangzhou in January. The original total investment of this project reached RMB 20.6 billion, and Kwok Tai Fook joined the project back in 2020;

In May, Kwok Tai Fook sold the relevant equity interests in Guangzhou IGC Mall and Guangzhou Conrad Hotel to Sun Hung Kai Properties, gaining proceeds of approximately RMB 147 million.

The continuous capital injection from the founding family is another important support line. In November 2023, Kong Kin Man, Chairman of Kwok Tai Fook's board of directors, sold his personal office building "65 Fleet Street" in London for GBP 85 million. In the latest announced restructuring plan, Kong Kin Man and his family members have undertaken to subscribe for no less than USD 10 million of the rights issue shares.

On the domestic debt front, Kwok Tai Fook has also successfully completed the restructuring ahead of schedule. In September 2025, Kwok Tai Fook announced that the restructuring plans for 2 onshore corporate bonds issued by its wholly-owned subsidiary Guangzhou Hejing Holdings Group and 1 onshore corporate bond issued by Guangzhou Tianjian Real Estate had all been approved at the relevant bondholders' meetings. Immediately afterwards, Kwok Tai Fook announced that the restructuring of all onshore corporate bonds had been completed.

In other words, Kwok Tai Fook is on the verge of completing the full restructuring of its domestic and offshore debts, and only the "final push" remains.

Once the offshore restructuring plan is finally approved, Kwok Tai Fook will be able to devote more energy to its daily operations. However, for the company to truly get out of the quagmire in the end, it still needs to wait for a substantial recovery in the real estate market.

This article is from the WeChat public account "The Perspective", authored by Perspective New Media, and published with authorization by 36Kr.