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China's Country Garden aims to finalize a USD 16.4 billion offshore debt restructuring agreement with creditors next month, seeking court approval by April. The Hong Kong court granted an extension until May 26 to monitor progress before ruling on a liquidation request filed by Ever Credit over a USD 205 million loan default. Country Garden, which defaulted on USD 11 billion in offshore bonds in late 2023, has proposed a 70% debt reduction plan and is negotiating key issues with major creditor groups. Successful restructuring could help the embattled developer avoid liquidation and stabilize China's struggling property market.
China's Country Garden anticipates finalising an agreement with its creditors next month to restructure USD 16.4 billion in offshore debt, with plans to seek court approval for the deal in April. The property developer was granted an extension until May 26 during a hearing to assess the progress of the restructuring before a decision is made on a liquidation request. Advertisement
Country Garden, once China's largest property developer by sales, defaulted on USD 11 billion in offshore bonds in late 2023. This further intensified the debt crisis in the real estate sector, which has already seen major defaults by companies like China Evergrande Group.
In January last year, the Hong Kong High Court ordered Evergrande to undergo liquidation after it failed to present a debt restructuring plan that satisfied its creditors. Avoiding a similar fate would enable Country Garden to refocus on a property market plagued by unfinished projects and weakened buyer confidence. Policymakers have been attempting to revive the sector with various stimulus measures since 2022, but challenges remain.
Country Garden announced this month that it has proposed a plan to reduce its offshore debt by 70% and has reached an "understanding" with a group of lenders. Country Garden requested additional time to address three key issues in negotiations with two major creditor groups: bondholders holding 30% of the outstanding U.S. dollar senior notes and a lender group consisting of seven banks; the unresolved issues involve the lender group releasing its security package in return for compensation; and the matters related to convertible bonds and the issuance of new notes.
The court stated that Country Garden must clarify whether it expects to reach an agreement with its creditors by the end of February. If no agreement is anticipated, the petitioner and creditors have the option to request an earlier hearing date. Ever Credit, a subsidiary of Hong Kong-listed Kingboard, filed a petition against Country Garden in February for failing to repay a USD 205 million loan.
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