Chinas Country Garden Says Might Not Meet All Debt Obligations
Beijing, (APP – UrduPoint / Pakistan Point News – 10th Oct, 2023) Debt-saddled Chinese property giant Country Garden said Tuesday that it did not expect to meet all of its offshore payment obligations in time as it edges towards a potential default.
Country Garden — one of China‘s biggest property developers — had racked up debts estimated at 1.43 trillion Yuan ($196 billion) by the end of 2022.
Its cash flow problems have ignited fears that it could collapse with consequences for China‘s economy, which is already suffering from record-high youth unemployment, flagging consumption and a broader crisis in the real estate sector.
Country Garden, which was already formally at risk of default in September, last month repaid $22.5 million in interest on loans at the last minute during a 30-day grace period.
It then negotiated the rescheduling of several repayments with creditors, with several more deadlines looming over the coming weeks.
The firm said Tuesday it had missed a payment of HK$470 million ($60 million).
The group has a grace period of 30 days to avoid a potential default.
But in a filing with the Hong Kong Stock Exchange, the firm said it “expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods”.
“Such non-payment may lead to relevant creditors of the Group demanding acceleration of payment of the relevant indebtedness owed to them or pursuing enforcement action,” the firm warned.
It promised to develop a “holistic solution in a fair and equitable manner” in repaying its debt obligations.
To that end, it said it has hired financial advisers “to evaluate the capital structure and liquidity” of its subsidiaries.
“The Company intends to continue to cooperate and engage in dialogue with all creditors to reach a feasible solution as soon as practicable,” it said.
It went on to ask “for patience from creditors” as it seeks to “assess the current challenges”.
