KWG Group (01813) has announced a significant development in its offshore debt restructuring. Over the past several months, the company has engaged in constructive discussions with members of an ad hoc group of noteholders and their respective advisors to formulate a consensual restructuring plan. The company has reached a preliminary agreement on the principal terms of a comprehensive restructuring solution with this group, subject to further negotiations to finalize the terms and documentation. Based on currently available information, the members of this group collectively hold or control more than 25.8% of the total outstanding principal amount of the applicable debts. This marks a crucial milestone in the company's restructuring process. The company expressed its gratitude for the ongoing support and involvement of the noteholder group and its advisors. KWG Group intends to implement the restructuring in Hong Kong via a scheme of arrangement and, if deemed necessary by the company and its advisors, through other corporate actions, legal procedures, or steps agreed upon with a majority of the noteholder group members. The restructuring involves the company's offshore debts, including $3.95 billion in senior notes, $380 million in syndicated loans, and approximately $334 million in other loan facilities borrowed or guaranteed by the company. The restructuring plan offers two economic options to the holders/lenders of these applicable debts. Under Option 1, for every $100 of principal amount, $0.87 would be converted to cash, $29.00 would be converted into zero-coupon exchangeable notes linked to the economic benefits of a property development project in Hong Kong, $20.00 would be converted into mandatory convertible bonds, with the remaining principal amount written off. The maximum principal amount allocable to Option 1 is $1.38 billion. Under Option 2, 100% of the principal amount held by creditors allocated to this option would be converted into mandatory convertible bonds. Holders of these bonds can voluntarily convert them into new shares of the company at a price of HKD 1.55 per share. All outstanding bonds will mandatorily convert into new shares two years after the restructuring's effective date, unless certain termination events occur. To maintain stability in the shareholding structure, the restructuring terms stipulate that for every $100 of bonds, $27 worth will be issued to the company's chairman. As part of the restructuring, the company will conduct a rights issue before the effective date, with proceeds used to cover restructuring-related expenses. To support the restructuring, the chairman and/or his family members will provide new funding of up to $10 million. This new capital may be provided as equity or subordinated debt, pending further discussion with the noteholder group. The company will also adopt a new share award plan, granting new shares to selected members of management, directors, and/or employees, offering up to 3% of the company's total shares on a fully diluted basis.