HONG KONG, Nov 10 - China's largest private property developer, Country Garden (2007.HK), is strategically working towards an offshore debt restructuring plan by the year's end, sources reveal. The company, marred by financial troubles since August, intends to finalize a tentative plan by December, initiating formal negotiations with offshore bondholders in February or March 2024.
The firm, which defaulted on a coupon payment in October, triggering default terms, plans to disclose its cash flow projections to key bondholders by year-end as a foundational element of the tentative restructuring plan. Sources with direct knowledge of the matter opted to remain anonymous due to confidentiality concerns, while Country Garden declined to comment.
Country Garden, grappling with nearly $11 billion in offshore bonds, has been under scrutiny since its debt issues surfaced, prompting Beijing to implement additional support measures for the property sector. The debt restructuring timeline, undisclosed until now, underscores the magnitude of the challenges facing the company.
In a recent development, Reuters reported that Chinese authorities have proposed Ping An Insurance Group take a controlling stake in Country Garden, a claim denied by Ping An. If realized, this state-engineered rescue would represent a significant intervention by authorities to bolster the financially strained and heavily indebted property sector, constituting a quarter of China's economy.
While some bondholders seek urgent talks following the missed coupon payment, Country Garden has privately communicated its efforts to formulate a debt repayment plan. On October 10, the company enlisted the services of CICC, Houlihan Lokey, and Sidley Austin to examine its capital structure and liquidity position and devise a comprehensive solution for offshore debt repayment.
CreditSights confirmed the company's "formal default" on offshore bonds due to the missed payment. As advisers, CICC, Houlihan Lokey, and Sidley Austin have initiated due diligence, examining Country Garden's financial condition, including onshore project cash flow.
The debt restructuring landscape in China's property market remains fluid, with few developers reaching agreements on repayment plans. Sunac China Holdings successfully completed a $9 billion offshore debt revamp in October, while China Evergrande faced setbacks in its $23 billion offshore debt restructuring plan after authorities launched an investigation into its founder and a flagship unit in September.
The firm, which defaulted on a coupon payment in October, triggering default terms, plans to disclose its cash flow projections to key bondholders by year-end as a foundational element of the tentative restructuring plan. Sources with direct knowledge of the matter opted to remain anonymous due to confidentiality concerns, while Country Garden declined to comment.
Country Garden, grappling with nearly $11 billion in offshore bonds, has been under scrutiny since its debt issues surfaced, prompting Beijing to implement additional support measures for the property sector. The debt restructuring timeline, undisclosed until now, underscores the magnitude of the challenges facing the company.
In a recent development, Reuters reported that Chinese authorities have proposed Ping An Insurance Group take a controlling stake in Country Garden, a claim denied by Ping An. If realized, this state-engineered rescue would represent a significant intervention by authorities to bolster the financially strained and heavily indebted property sector, constituting a quarter of China's economy.
While some bondholders seek urgent talks following the missed coupon payment, Country Garden has privately communicated its efforts to formulate a debt repayment plan. On October 10, the company enlisted the services of CICC, Houlihan Lokey, and Sidley Austin to examine its capital structure and liquidity position and devise a comprehensive solution for offshore debt repayment.
CreditSights confirmed the company's "formal default" on offshore bonds due to the missed payment. As advisers, CICC, Houlihan Lokey, and Sidley Austin have initiated due diligence, examining Country Garden's financial condition, including onshore project cash flow.
The debt restructuring landscape in China's property market remains fluid, with few developers reaching agreements on repayment plans. Sunac China Holdings successfully completed a $9 billion offshore debt revamp in October, while China Evergrande faced setbacks in its $23 billion offshore debt restructuring plan after authorities launched an investigation into its founder and a flagship unit in September.
