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Financial consultation on debt restructuring
1. Overview

Debt restructuring comes under two different categories:

Active restructuring: designed to optimize debt structure, reduce the cost of debt, adjust debt maturities, and simplify the financing method by restructuring maturities, interest rates and the guarantee methods of existing liabilities;

Passive restructuring: designed to protect the debtor’s credit standing and the creditor’s interests when the debtor defaults on a debt repayment or is running short of cash flows by forcing the debtor to carry out creditor-led debt restructuring.

2. Target customers

Target customers for active debt restructuring: high-end customers that have a huge asset base, stable cash flows and a complex debt structure, or whose assets CMB plans to swap through financing.

Target customers for passive debt restructuring: customers that suffer short-term cash flow problems and poor solvency, that are prone to full bank debt defaults, or who have defaulted on debt.

3. Service description

Financial consultations services for active debt restructuring include:

Drafting a Debt Restructuring Proposal to examine the feasibility of debt restructuring in terms of borrower, interest rate, debt maturity and guarantee method; outlining the overall target and plan for debt restructuring; and estimating the yields of debt restructuring;

Rearranging debt repayments and optimizing debt maturities based on the customer’s cash flow status and overall solvency;

Developing innovative portfolios of structured financing tools such as trust financing and asset-backed securities to improve the financing structure and reduce the financing cost;

Optimally combining guarantee methods such as guarantee, asset mortgage and equity pledges to simplify the financing facility;

Communicating with various financial institutions on behalf of the customer to implement the debt restructuring plan.

Financial consultations services for passive debt restructuring include:

Drafting a Feasibility Study Report of Debt Restructuring to assess the customer’s debt status, estimate its cash flows and overall solvency, proposing a debt restructuring plan and analyzing the yields for each party involved in restructuring;

Maximally and fairly protecting the equity interests of all creditors by leveraging its pool of guarantee resources;

Redefining debt maturities and interest rate structures based on the customer’s debt-payment ability;

Restructuring the pool of borrowers for a core company with a strong debt-paying ability if the customer raises funds from multiple affiliates;

For a customer that has obtained financing from several banks, organizing a debt management committee to draft a restructuring plan and the rules of procedure for the committee with the aim of ensuring all the creditors act in consistency;

Drafting the Debt Restructuring Agreement to govern various relationships.

4. CMB's advantages

Commercial banks usually excel in the area of debt financing. Steered by its credit policy, CMB has translated its strengths in terms of financing, debt scheduling and credit into a comprehensive array of financing services.

All the contents stated above are for your reference only. Please consult the local branch of China Merchants Bank for further information. China Merchants Bank reserves the ultimate right of interpretation for the contents in this page.