South China Morning Post
Thu, October 19, 2023
Embattled property developer Country Garden issued a statement on Thursday morning rejecting talk, which it said was spread across several social media platforms, that its founder and chairman had both left China.
The company said the talk has had "adverse effects", adding that its founder, Yeung Kwok-keung or Yang Guoqiang in Mandarin, and his daughter Yang Huiyan, who is also the company's chairman are still "working as normal" in China.
Country Garden, once the largest Chinese home builder by sales, also said it reserves the right to "pursue responsibility for malicious rumour mongering".
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The news comes as the Chinese property developer, on Wednesday, reportedly missed US$15 million in coupon payments without explanation, triggering concerns that the group could face its first-ever default on its offshore debt, which could lead to one of China's largest corporate restructurings at a time when the country's property crisis is escalating.
Yeung Kwok-keung, founder of Country Garden Holdings Company Limited. Photo: Winson Wong
Country Garden did not confirm if it had failed to meet its US$15 million offshore debt obligations, but said it is seeking a "holistic" solution to its challenges. Last week, it warned it would not be able to service all of its offshore borrowings on time.
"Due to deep readjustments within China's property sector, the company's sales are under constant pressure," a Country Garden spokeswoman said in a text message. "As stated in a previous notice, the company expects to be unable to fulfil all of its offshore debt obligations, and is seeking a holistic solution to address its challenges, and only when the company maintains a going concern status, can we restore the most value to stakeholders."
The company, missed an initial deadline for the dollar-bond coupon payment last month, triggering a 30-day grace period that ends between October 17 and 18, as the missed payment date was on a Sunday.
The spokeswoman said the Foshan-based company has hired professionals for making evaluation studies. China International Capital Corp and Houlihan Lokey have been picked as joint financial advisers, and Sidley Austin was hired as a legal adviser to evaluate its capital structure and liquidity.
"Based on the principle of fairness and justice, and based on what's feasible, we will propose a solution, which we will communicate in a timely manner to ensure the rights and interests of all parties concerned," the spokeswoman said.
Country Garden founder Yeung recently showed up in public during a site inspection in Guangdong's Shunde city, where he urged workers to ensure construction quality, according to a statement issued by the company last Friday.
Country Garden has an estimated 118.5 billion yuan of non-yuan debt. Around US$557.5 million of offshore interest and principal maturities and around US$1.75 billion of onshore bond maturities will fall due by the end of this year, according to research company CreditSights.
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Xie Yu
Fri, October 20, 2023
A woman walks near a construction site of apartment buildings in Beijing
By Xie Yu
HONG KONG (Reuters) - More debt defaults are likely to emerge in China's property sector as troubled developers struggle with a weak home sales outlook, while fund raising remains challenging, according to credit analysts.
A massive $124.5 billion worth of bonds are now in default in the entire $175 billion China property dollar bond sector, according to the latest calculations by research company CreditSights, which calculated the country's once biggest private developer Country Garden's entire dollar bond as defaulted due to the cross-default clause.
Counting October, there is a total of $60.5 billion worth of Chinese property bonds due in the next 6 months, with offshore bonds taking up at least one third of it, according to Dealogic data.
Country Garden's international bondholders are now seeking urgent talks with the company.
Strains have also shown in other companies. State-backed Sino-Ocean Group is to hold a meeting of bondholders on Friday, and proposed to extend the grace period for the company to repay bonds' interest due this week to next Thursday, a filing by the company to the Hong Kong Exchange said late on Thursday.
It cited operational difficulties as the reason for needing to delay the payment.
The company said it was also prepared to formulate a reasonable debt repayment plan if it fails to repay bonds as they are due.
Another major developer Gemdale has since Tuesday seen its bonds slide after the resignation of its chairman sparked fears that it too may be in financial trouble.
Dalian Wanda Group has started negotiations on a proposal to avoid repaying about 30 billion yuan ($4.11 billion) if it fails to complete a initial public offering (IPO) plan this year, Bloomberg News reported on Thursday.
"For property developers who have yet to default on debts, the outlook remains bleak, as we haven't seen a turnaround by the industry with sales numbers remaining weak," said Ting Meng, a credit analyst at ANZ Bank China.
China's new home prices fell for the third straight month in September, official data showed on Thursday, dashing hopes of a turnaround in demand during a traditionally peak home buying period despite efforts to revive the crisis-hit property sector.
Ricky Tsang, an analyst with S&P Global Ratings, said apart from the weak cash flow from home sales, fund raising for developers, particularly the private ones, remains tight.
"Developers who are most in need of financing are struggling to find qualified assets, in most cases shopping malls or office buildings, as pledges to issue guaranteed bonds," Tsang said.
(Reporting by Xie Yu in Hong Kong, Editing by Raju Gopalakrishnan)
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