Sunac China Holdings Limited — Capital/Financing Update 2017

Aug 3, 2017

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities referred to herein will not be registered under the Securities Act, and may not be offered or sold in the United States except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act. Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making the offer and its management and financial statements. The Company does not intend to make any public offering of securities in the United States.

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(I) ISSUANCE OF US$400 MILLION 6.875% SENIOR NOTES DUE 2020 AND (II) ISSUANCE OF US$600 MILLION 7.950% SENIOR NOTES DUE 2022

Joint Global Coordinators and Joint Bookrunners

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Reference is made to the announcement of the Company dated 2 August 2017 in respect of the proposed Notes Issue.

On 2 August 2017, the Company, the Subsidiary Guarantors and the Subsidiary Guarantor Pledgors entered into the Purchase Agreement with HSBC, Morgan Stanley, China CITIC Bank International, Citigroup, CMB International, Haitong International, IBC, ICBC International and SPDB International in connection with the issue of senior notes of US$1 billion in total, including the US$400 million 6.875% senior notes due 2020 (i.e. the 2020 Notes) and the US$600 million 7.950% senior notes due 2022 (i.e. the 2022 Notes).

The purposes of the Notes Issue are to optimize the debt structure of the Company and to support the healthier and sustainable development of the Company. The proceeds from the Notes Issue are intended to be used for re-financing the Group’s existing indebtedness.

The Company has received approval-in-principle for the listing and quotation of the 2020 Notes and has made application for the listing and quotation of the 2022 Notes on the Official List of the SGX-ST. Admission to the Official List of the SGX-ST and quotation of the Notes on the SGX-ST are not to be taken as an indication of the merits of the Company, its subsidiaries, or the Notes. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained herein. No listing of the Notes has been, or will be, sought in Hong Kong.

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Reference is made to the announcement of the Company dated 2 August 2017 in respect of the proposed Notes Issue.

The Board is pleased to announce that on 2 August 2017, the Company, together with the Subsidiary Guarantors and the Subsidiary Guarantor Pledgors, entered into the Purchase Agreement with HSBC, Morgan Stanley, China CITIC Bank International, Citigroup, CMB International, Haitong International, IBC, ICBC International and SPDB International in connection with the issue of the 2020 Notes and the 2022 Notes.

Details of the Purchase Agreement and the Notes Issue are set forth below.

THE PURCHASE AGREEMENT

Date

• 2 August 2017

Parties to the Purchase Agreement

• (a) the Company as issuer;

• (b) the Subsidiary Guarantors;

• (c) the Subsidiary Guarantor Pledgors;

• (d) HSBC;

• (e) Morgan Stanley;

• (f) China CITIC Bank International;

• (g) Citigroup;

• (h) CMB International;

• (i) Haitong International;

• (j) IBC;

• (k) ICBC International; and

• (l) SPDB International.

HSBC, Morgan Stanley, China CITIC Bank International, Citigroup, CMB International, Haitong International, IBC, ICBC International and SPDB International are the joint global coordinators and joint bookrunners in respect of the offer and sale of the Notes. They are also the initial purchasers of the Notes. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, each of HSBC, Morgan Stanley, China CITIC Bank International, Citigroup, CMB International, Haitong International, IBC, ICBC International and SPDB International is an independent third party and not a connected person of the Company.

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The Notes have not been, and will not be, registered under the Securities Act. The Notes will only be offered outside the United States in accordance with Regulation S under the Securities Act. None of the Notes will be offered to the public in Hong Kong and none of the Notes will be placed to any connected persons of the Company.

Principal terms of the Notes

Notes offered

Subject to certain conditions to completion, the Company will issue:

• (1) the 2020 Notes in the aggregate principal amount of US$400 million which will mature in 2020, unless earlier redeemed pursuant to the terms thereof; and

• (2) the 2022 Notes in the aggregate principal amount of US$600 million which will mature in 2022, unless earlier redeemed pursuant to the terms thereof.

Issue price

The respective issue price of each series of the Notes is set out below:

• (1) in respect of the 2020 Notes, the issue price will be 99.005% of the principal amount of the 2020 Notes; and

• (2) in respect of the 2022 Notes, the issue price will be 98.991% of the principal amount of the 2022 Notes.

Interest

The 2020 Notes and the 2022 Notes will bear interest from and including 8 August 2017 at the rate of 6.875% and 7.950% per annum, respectively, payable semi-annually in arrears on 8 February and 8 August of each year, commencing 8 February 2018.

Ranking of the Notes

The Notes will be general obligations of the Company and will be guaranteed by the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any) on a senior basis and will be secured by the Collateral, subject to release under certain circumstances.

The Notes will (1) rank senior in right of payment to any existing and future obligations of the Company expressly subordinated in right of payment to the Notes, (2) rank at least pari passu in right of payment with the Existing Pari Passu Secured Indebtedness and all other unsecured, unsubordinated indebtedness of the Company (subject to any priority rights of such unsecured, unsubordinated indebtedness pursuant to applicable law), (3) be effectively subordinated to the other secured obligations (if any) of the Company, the Subsidiary Guarantors and the JV Subsidiary Guarantors (if any), to the extent of the value of the assets serving as security therefor (other than the Collateral), and (4) be effectively subordinated to all existing and future obligations of the subsidiaries of the Company which are not providing guarantees under the Notes.

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Security

The Company and the initial Subsidiary Guarantor Pledgors have pledged in favor of a collateral agent the Collateral in order to secure the obligations of the Company under the debt agreements of the Existing Pari Passu Secured Indebtedness and of such Subsidiary Guarantor Pledgors under their respective subsidiary guarantees of the Existing Pari Passu Secured Indebtedness and the obligations of the Company or any Subsidiary Guarantor Pledgor under other permitted pari passu secured indebtedness as defined in the Notes.

The Company has agreed to extend, or cause the initial Subsidiary Guarantor Pledgors to extend, as the case may be, the benefit of the security interests created over the Collateral to the holders of the Notes on the issue date of the Notes in order to secure the obligations of the Company under the Notes and the Indentures and of such initial Subsidiary Guarantor Pledgors under their respective Subsidiary Guarantees.

The Collateral may be released or reduced in the event of certain asset sales and certain other circumstances. The Collateral may be released at any time after the later of (i) the repayment in full of all amounts owing by the Company or any Subsidiary Guarantors or JV Subsidiary Guarantors under the Existing Pari Passu Secured Indebtedness; and (ii) the date on which no outstanding indebtedness other than the Notes is secured by the Collateral; provided that, no default has occurred and is continuing on such date.

Covenants

The Notes, the Indentures and the guarantees provided by the Subsidiary Guarantors and the JV Subsidiary Guarantors will limit the Company’s ability and the ability of certain of its subsidiaries to, among other things:

• (a) incur or guarantee additional indebtedness and issue disqualified or preferred stock;

• (b) declare dividends on its capital stock or purchase or redeem capital stock;

• (c) make investments or other specified restricted payments;

• (d) issue or sell capital stock of certain of the Company’s subsidiaries;

• (e) guarantee indebtedness of certain of the Company’s subsidiaries;

• (f) sell assets;

• (g) create liens;

• (h) enter into sale and leaseback transactions;

• (i) enter into agreements that restrict certain of the Company’s subsidiaries’ ability;

• (j) to pay dividends, transfer assets or make intercompany loans;

• (k) enter into transactions with shareholders or affiliates; and

• (l) effect a consolidation or merger.

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Optional Redemption

2020 Notes

The 2020 Notes may be redeemed in the following circumstances:

• (1) The Company may choose to redeem all instead of part of the 2020 Notes at any time prior to 8 August 2020 at a redemption price equivalent to 100% of the principal amount of the 2020 Notes plus the applicable premium as at (but not including) the redemption date and the accrued and unpaid interest (if any);

• (2) The Company may redeem up to 35% of the aggregate principal amount of the 2020 Notes at a redemption price of 106.875% of the principal amount of the 2020 Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date, with the proceeds from sales of certain kinds of its capital stock, at any time and from time to time prior to 8 August 2020, subject to certain conditions.

2022 Notes

The 2022 Notes may be redeemed in the following circumstances:

• (1) At any time and from time to time on or after 8 August 2020, the Company may redeem the 2022 Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest, if any, to (but not including) the redemption date if redeemed during the twelve month period beginning on 8 August of each of the years indicated below.

Year

Redemption Price

2020 103.975% 2021 and afterwards 101.9875%

• (2) At any time prior to 8 August 2020, the Company may at its option redeem the 2022 Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the 2022 Notes plus the customary make-whole premium as of, and accrued and unpaid interest, if any, to (but not including) the redemption date.

• (3) At any time and from time to time prior to 8 August 2020, the Company may redeem up to 35% of the aggregate principal amount of the 2022 Notes at a redemption price of 107.950% of the principal amount of the 2022 Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date, with the proceeds from sales of certain kinds of its capital stock, subject to certain conditions.

Repurchase upon change of control

Upon the occurrence of certain events constituting a change of control of the Company (as defined in the Notes) as result of which there is a decline in the rating of the Notes, the Company must make an offer to repurchase all outstanding Notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to (but not including) the repurchase date.

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Events of Default

The 2020 Notes and the 2022 Notes contain certain customary events of default, including default in the payment of principal, or of any premium, on the respective series of the Notes, when such payments become due, default in payment of interest which continues for 30 days, breaches of covenants, insolvency and other events of default specified in the Indentures. If an event of default occurs and is continuing, the trustee under the 2020 Notes Indenture or the 2022 Notes Indentures, as the case may be, or the holders of at least 25% of the respective series of the Notes may declare the principal of the respective series of the Notes plus any accrued and unpaid interest and premium (if any) to be immediately due and payable.

Reasons for the Notes Issue and proposed use of proceeds

The Company is a company incorporated in the Cayman Islands with limited liability, and the shares of which are listed on the Main Board of the Stock Exchange. As specialised in integrated development of residential and commercial properties, the Group is one of the leading real estate developers in the PRC. The Group adheres to its development strategy of regional focus and positioning on high-end quality products, and has developed or is developing many premium property projects in tier 1 cities, surrounding cities of tier 1 cities and core cities in the PRC with various types of properties ranging from high-rise residences, townhouses, retail properties and offices.

The purposes of the Notes Issue are to optimize the debt structure of the Company and to support the healthier and sustainable development of the Company. The proceeds from the Notes Issue are intended to be used for re-financing the Group’s existing indebtedness.

Listing

The Company has received approval-in-principle for the listing and quotation of the 2020 Notes and has made application for the listing and quotation of the 2022 Notes on the Official List of the SGX-ST. Admission to the Official List of the SGX-ST and quotation of the Notes on the SGX-ST are not to be taken as an indication of the merits of the Company, its subsidiaries, or the Notes. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained herein. No listing of the Notes has been, or will be, sought in Hong Kong.

DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context otherwise requires:

• “2014 Notes” the 8.75% guaranteed senior notes due 2019 in the principal amount of US$400 million issued by the Company

• “2020 Notes” US$400 million principal amount of the 6.875% senior notes due 2020 of the Company

• “2020 Notes Indenture” the written agreement among the Company, the Subsidiary Guarantors and the trustee that specifies the terms of the 2020 Notes including the interest rate of the 2020 Notes and the maturity date

• “2022 Notes” US$600 million principal amount of the 7.950% senior notes due 2022 of the Company

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“2022 Notes Indenture”	the written agreement among the Company, the Subsidiary
	Guarantors and the trustee that specifies the terms of the 2022 Notes
	including the interest rate of the 2022 Notes and the maturity date
“Board”	the board of Directors
“China CITIC Bank	China CITIC Bank International Limited, one of the joint global
International”	coordinators and joint bookrunners in respect of the Notes Issue
“Citigroup”	Citigroup Global Markets Limited, one of the joint global
	coordinators and joint bookrunners in respect of the Notes Issue
“CMB International”	CMB International Capital Corporation Limited, one of the joint
	global coordinators and joint bookrunners in respect of the Notes
	Issue
“Collateral”	the charge over shares of the Subsidiary Guarantors
“Company”	Sunac China Holdings Limited (融創中國控股有限公司), a company
	incorporated under the laws of the Cayman Islands with limited
	liability, and the shares of which are listed on the main board of the
	Stock Exchange (stock code: 1918)
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Directors”	the directors of the Company
“Existing Pari Passu	the 2014 Notes
Secured Indebtedness”
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Haitong International”	Haitong International Securities Company Limited, one of the joint
	global coordinators and joint bookrunners in respect of the Notes
	Issue
“HSBC”	The Hongkong and Shanghai Banking Corporation Limited, one of
	the joint global coordinators and joint bookrunners in respect of the
	Notes Issue
“IBC”	Industrial Bank Co., Ltd. Hong Kong Branch, one of the joint global
	coordinators and joint bookrunners in respect of the Notes Issue
“ICBC International”	ICBC International Securities Limited, one of the joint global
	coordinators and joint bookrunners in respect of the Notes Issue
“Indentures”	the 2020 Notes Indenture and the 2022 Notes Indenture

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“JV Subsidiary	the guarantees to be provided by the JV Subsidiary Guarantors in
Guarantees”	respect of the Notes
“JV Subsidiary	subsidiaries of the Company that will in the future provide
Guarantors”	limited-recourse guarantee for the Notes
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Morgan Stanley”	Morgan Stanley & Co. International plc, one of the joint global
	coordinators and joint bookrunners in respect of the Notes Issue
“Notes”	the 2020 Notes and the 2022 Notes
“PRC”	the People’s Republic of China (excluding, for the purpose of this
	announcement, Hong Kong, the Macao Special Administrative
	Region of the People’s Republic of China and Taiwan)
“Purchase Agreement”	the agreement dated 2 August 2017 entered into among the
	Company, HSBC, Morgan Stanley, China CITIC Bank International,
	Citigroup, CMB International, Haitong International, IBC, ICBC
	International and SPDB International, the Subsidiary Guarantors
	and the Subsidiary Guarantor Pledgors in relation to the 2020 Notes
	Issue and the 2022 Notes Issue
“Regulation S”	Regulation S under the Securities Act
“Securities Act”	the United States Securities Act of 1933, as amended
“SGX-ST”	Singapore Exchange Securities Trading Limited
“SPDB International”	SPDB International Capital Limited, one of the joint global
	coordinators and joint bookrunners in respect of the Notes Issue
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subsidiary Guarantees”	the guarantees to be provided by the Subsidiary Guarantors in
	respect of the Notes
“Subsidiary Guarantors”	certain subsidiaries of the Company organized outside the PRC
	which will jointly and severally guarantee the Company's obligations
	under the Notes
“Subsidiary Guarantor	certain Subsidiary Guarantors that will provide pledges over the
Pledgors”	shares of the Subsidiary Guarantors held by them to secure the
	obligations of such Subsidiary Guarantors under their guarantees for
	the Notes
“United States”	United States of America

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“US$”

United States dollar, the lawful currency of the United States

“%”

per cent.

By order of the Board Sunac China Holdings Limited SUN Hongbin Chairman

Hong Kong, 3 August 2017

As at the date of this announcement, the executive Directors are Mr. SUN Hongbin, Mr. WANG Mengde, Mr. JING Hong, Mr. CHI Xun, Mr. TIAN Qiang, Mr. SHANG Yu, Mr. HUANG Shuping and Mr. SUN Kevin Zheyi; and the independent non-executive Directors are Mr. POON Chiu Kwok, Mr. ZHU Jia, Mr. LI Qin, Mr. MA Lishan and Mr. TSE Chi Wai.

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