Hong Kong
CNN
—
Country Garden is raising money to avoid default as the troubled real estate giant battles a liquidity crisis that spreads across the Chinese economy and even overseas. It is feared that it is possible.
The Foshan, Guangdong-based company said on Wednesday it plans to issue 350 million shares at HK$0.77 (about $0.10) each to repay loans to creditors. Notification to the stock exchange. The total value of the shares will be $270 million ($34.4 million).
Country Garden will not receive any cash from the transaction, according to the filing. Instead, the shares will be used to offset funds needed to repay Kingboard Holdings, a Hong Kong-based laminate manufacturer.
The move marks a new effort by the real estate company, which last year was China’s biggest residential real estate developer, to avoid default as it scrambles to raise capital and reassure investors.
The company said on Monday that its largest overseas development, a $100 billion project in Malaysia, was “operating normally”, adding that its operations in the region were “safe and stable”. . The announcement, coupled with China’s latest policy measures to support the real estate sector, briefly boosted Country Garden shares in Hong Kong.
Last week, the company changed the deadline for bondholders to vote on a payment extension plan for its 3.9 billion yuan ($530 million) bond from Aug. 25 to Aug. 31.
Country Garden is expected to release first-half results later on Wednesday. Investors will be watching the report for details on the company’s cash flow and how it will address debt issues.
Financial issues are the focus this month, as Country Garden is facing financial difficulties. Investors fear the company’s default could further damage already fragile investor confidence as the Chinese government seeks to rescue a beleaguered sector that is key to China’s economic growth. are doing.
Reports earlier this month that the company was behind on payments on its $2 bond shocked the market, as the company was seen as the biggest surviving developer in a crisis-hit industry.
Country Garden acknowledged on August 10 that it was facing its “biggest challenges” since its founding in 1992, citing declining sales and a difficult refinancing environment. It predicted a deficit of $6.2 billion to $7.6 billion for the first half of this year.
Following this news, the company’s securities prices plummeted, and the company was forced to suspend trading in 11 domestic bonds it held.Chinese state media report At the time, the developer was expected to begin debt restructuring soon.