POWERLONG REAL ESTATE (01238) released a circular detailing its offshore debt “Holistic Solution”, anchored by two core actions:

1. Issue of Mandatory Convertible Bonds • Aggregate principal: up to US$1.20 billion, to be placed with scheme creditors on the restructuring effective date. • Tenor: 18 months; zero coupon; automatic conversion 20 business days before maturity unless a suspension event exists. • Conversion price: HK$2.30 per share (≈654% premium to last close before signing RSA on 10 Oct 2025); maximum 4.07 billion new shares (49.60% of enlarged share capital). • Secured by (i) the group’s remaining Powerlong CM shares (excluding those earmarked for transfer/disposal), (ii) an offshore designated account, and (iii) full share pledges over Starlong (HK) 2 and 5. • Listing of the bonds sought on the SGX-ST; listing approval for conversion shares to be obtained from HKEX. • Conversion shares will be issued under a specific mandate to be voted at an extraordinary general meeting (EGM) on 12 Jun 2026.

2. Transfer of Powerlong CM Shares • Up to 208.30 million Powerlong CM shares (32.4% of its issued capital) reserved for creditors selecting “Option 2” in the scheme. • Exchange price: HK$15.00 per share, implying maximum consideration of roughly US$400.06 million. • Together with the previously announced sale of a 25% stake (160.73 million shares) in Powerlong CM to Prime Capital Investment for HK$360.83 million, the Company’s holding in Powerlong CM could fall from 63.0% to 5.6% post-completion of both transactions.

Scheme Structure and Creditor Options • 85.48% of offshore debt holders (US$2.90 billion principal) have signed the Restructuring Support Agreement (RSA). • Creditors may choose among cash (12% of claims, capped at US$40 million), exchange of Powerlong CM shares, mandatory convertibles, new medium-term notes, new long-term notes/new loan, or a combination thereof. • Court sanction hearing set for 17 Jun 2026; restructuring must complete by 30 Sep 2026 unless extended.

Impact on Capital and Financials • Full bond conversion would expand share count from 4.14 billion to 8.22 billion shares; public float expected to remain above 25%. • Post-transfer and disposal, Powerlong CM will cease to be a subsidiary; the Group forecasts a RMB1.70 billion gain and liability reduction of about RMB5.18 billion. • The restructuring aims to extend maturities, lower near-term cash interest and stabilise the capital structure.

EGM Details • Shareholders will vote on the specific mandate for the bond issue and approval of the share transfer on 12 Jun 2026 in Shanghai.