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Country Garden recently secured support from a key bondholder group for its offshore debt restructuring plan, aiming to reduce its USD 14.1 billion debt by 78%. The agreement includes options such as extended maturities and new debt instruments. Chairperson Yang Huiyan will convert her USD 1.15 billion loan into equity and invest an additional USD 50 million. The company has set deadlines in May for other creditors to join the plan, offering incentives for early agreement. This move comes as Country Garden prepares for a critical court hearing in Hong Kong regarding a liquidation petition
Country Garden, once China's leading property developer, has secured crucial support from a major bondholder group holding 30% of its USD 10.3 billion offshore bond debt. This agreement, reached earlier this week, marks a significant step in the company's ongoing efforts to restructure its offshore liabilities, which aim to reduce USD 14.1 billion by 78%. The development comes ahead of a critical Hong Kong court hearing scheduled for late May concerning a liquidation petition filed by Ever Credit, a subsidiary of Kingboard Holdings. Advertisement
The restructuring proposal offers five options to creditors, including extending debt maturities by up to 11.5 years and issuing new debt instruments. To incentivize participation, Chairperson Yang Huiyan has committed to converting her USD 1.15 billion shareholder loan into equity and investing an additional USD 50 million to acquire a 60% stake in the company's Malaysian unit, Country Garden Pacificview. Post-restructuring, her ownership in the company is expected to decrease from 52% to no less than 40%.
Country Garden has urged other creditors to sign the restructuring agreement by May 23, offering a 0.1% early-bird fee for those who agree by May 9. A successful restructuring typically requires support from over 75% of creditors by value. The company's shares experienced a brief surge of up to 8.1% following the announcement, before settling at a 2.3% gain.
In March, Country Garden reported a narrowed net loss of 32.8 billion yuan (approximately USD 4.48 billion) for 2024, a significant improvement from the 178.4 billion yuan loss in 2023. The company continues to face legal pressures from creditors amid a broader real estate sector downturn in China.
Country Garden's recent agreement with a major bondholder group represents a pivotal moment in its efforts to stabilize amidst China's real estate crisis. By offering flexible restructuring options and demonstrating commitment through significant investments from its chairperson, the company aims to rebuild trust and navigate its financial challenges. The upcoming weeks will be crucial as it seeks broader creditor support to finalize its restructuring plan and avert liquidation.
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