China’s Country Garden proposes deal to restructure offshore debt By Reuters
HONG KONG (Reuters) – A Chinese property developer Country Garden (HK:) on Thursday proposed an offshore debt restructuring deal that offers creditors a number of options including converting debt to cash and extending maturities.
The restructuring update was given before the company’s bankruptcy hearing on Jan. 20, which paves the way for the developer to seek more time from the Hong Kong High Court to implement the restructuring plan.
The proposal provides options for creditors between auctioning off their cash debt and acquiring convertible bonds (MCBs) with a maturity date of late 2028.
It also includes three other options to extend the maturity up to 11-1/2 years in line with the choice of new debt instruments, including MCBs and mortgages.
Once China’s largest property developer, Country Garden defaulted on $11 billion in offshore bonds due in late 2023, deepening the debt crisis in a sector that had already experienced defaults by many developers, including China. Evergrande (HK:) The group.
Country Garden’s December contract sales fell 50% from a year earlier to 6.91 billion yuan ($942.43 million), according to an official filing.
The company showed revised cash flow to other creditors when it submitted preliminary terms of its restructuring proposal, Reuters reported in November.
The prolonged downturn in the property market weighed on developers’ ability to pay off debt.
Smaller peer Sunac China has informed some of its overseas creditors that it is unlikely to meet the September maturity deadline for its restructured bonds, sources said, as weak sales raised the prospect of a new round of overseas debt restructuring in the property sector.
Country Garden Chairman Yang Huiyan said at the monthly management meeting on Monday that the company has completed 380,000 homes by 2024, according to the company’s WeChat account.
This year, Country Garden will need to complete fewer homes but will continue to focus on delivering homes to buyers and restoring its balance sheet, Yang added.
The developer will hold a board meeting next Tuesday to approve its 2023 audited annual results and 2024 unaudited interim results.
The company’s shares have been suspended since April 2, 2024, pending the release of financial results.
($1 = 7.3321 lots)
(This story has been corrected to remove the $10.3 billion debt figure, which was the size of the bond, not the amount of the debt restructuring, in the headline and paragraph 1)
