The transaction adds to a string of asset sales after the Foshan, Guangdong-based developer slumped into a financial crisis. Once China’s biggest home builder by sales, the firm skipped a US$15.4 million coupon payment on an offshore bond in October, roiling an already weak market.
The firm surprisingly repaid a 800 million yuan bond on Wednesday, averting what would have been its first onshore default, as investors triggered a put option due on the same day.
“The group is actively resolving the periodic liquidity pressure,” Country Garden said in its filing. “The net proceeds from the sale will be used for the offshore restructuring.”
The deal indicates Country Garden’s renewed effort to improve its funding, according to said Jeff Zhang, an analyst at Morningstar. Still, he said the incremental progress is not significant. Given that the developer is facing 250 billion yuan of interest-bearing liabilities, and home sales have halved from a year ago, its debt servicing capability will be severely tested, he added.
“Onshore debt or note payable to suppliers should be relatively safe” for creditors, said Tommy Kung, analyst at KGI Asia, a Hong Kong-based wealth management company. “Onshore debt is highly related to trust products and if debts owed to suppliers are not paid, it might damage the progress of housing delivery and affect social stability.”
Wang Jianlin cedes control of Hong Kong IPO candidate in US$5.3 billion deal
Wang Jianlin cedes control of Hong Kong IPO candidate in US$5.3 billion deal
Country Garden this week disclosed another round of pay cuts to trim costs. Four of its top executives, including chairman Yang Huiyan and her husband Chen Chong, voluntarily offered to cut their salaries for the third time since 2022, to focus on delivering pre-sold properties and prevent more defaults amid stagnating home sales.
Separately, PAG and Dalian Wanda announced earlier this week a plan to redeem the 2016 bets, ahead of the year-end deadline. The US$5.3 billion deal forced Wang, the 69-year billionaire founder, to cede control of Zhuhai Wanda, with outside investors wresting a collective 60 per cent stake.