Vanke had held discussions with parties including state-owned investment company Guangdong Holdings and a Tianjin-based state-owned firm to exit its investment, said the people, who asked not to be identified because the matter is private. No agreement has been reached, the people added. Vanke bought a 21.4 per cent stake in GLP for about S$3.4 billion (US$2.5 billion) in 2018.
Shenzhen-based Vanke has become the latest flashpoint in the nation’s property downturn, and is seeking to ease concerns about its ability to avoid default. Last weekend, executives including chairman Yu Liang told brokerages that it is making plans to resolve liquidity pressure and short-term operational difficulties.
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A vanishing fairyland dream: how China Evergrande rose, then crashed
A vanishing fairyland dream: how China Evergrande rose, then crashed
Vanke said at the Sunday investor event that it is willing to sell or pledge any noncore assets for funds as long as terms are appropriate, people familiar said earlier this week, citing management. Some of its regional units are setting up teams for potential asset sales.
It is not clear how attractive the stake in GLP might be. The company, a former investor darling that has most of its logistics assets in China, has faced concerns about its liquidity because of the nation’s property crisis and economic slowdown. It was stripped of its last investment-grade rating by S&P Global Ratings in November.
Still, GLP redeemed two dollar bonds worth more than US$600 million in recent months, illustrating its financial resilience, according to a Bloomberg Intelligence analysis. The price of its 3.875 per cent dollar notes due in June 2025 has recovered from a record low of 56 cents to trade at 87 cents on the dollar on Wednesday.
Meanwhile, Vanke is also preparing an asset package totalling about 130 billion yuan (US$18 billion) to use as collateral as it seeks new bank loans, Bloomberg reported earlier this week.
In March, Bloomberg also reported that Vanke has been in talks with banks over a plan to swap bond holdings worth tens of billions of yuan in principal into secured debt. The swap would help Vanke avoid a public default while giving banks collateral to protect against any potential losses.
Credit rating companies including S&P have downgraded Vanke to junk in recent weeks as plunging home sales worsen its cash woes. The company’s longer-term financial position may deteriorate if it is unable to carry out planned asset sales, S&P said last week.
Vanke faces a maturity wall in 2025, when 36.2 billion yuan of onshore and offshore bonds come due, according to S&P. As of end-2023, the company had accessible cash of 36.3 billion yuan, the ratings firm estimated.