The Chinese real estate crisis worsens: the giant Country Garden announced that it will not be able to pay all its debts


Country Garden Holding, which was the largest real estate developer in China, acknowledged this Tuesday in a statement sent to the Hong Kong Stock Exchange the non-payment of the principal amount of “a certain debt” by HK$470 million ($60 million) and warned that expects not to be able to meet all its debt payment obligations abroad (“offshore”) as scheduled or within the applicable grace period.

The company has warned that potential non-payment of amounts owed, including, but not limited to, payment obligations on US dollar bonds issued by Country Garden may result in creditors demanding “accelerated performance of their debt obligations.” relevant or adopt coercive measures.”

In this sense, the promoter has assured that will actively promote offshore debt management measures and, under the premise of respecting the existing legal status and legal payment order of all creditors, it will fairly and equitably formulate overall solutions to achieve a long-term sustainable capital structure.

In this way, Country Garden has hired China International Capital Corporation Hong Kong Securities and Hualian Norge (China) as financial advisors, as well as Sidley Austin Law Firm as legal advisors to help assess the capital structure and liquidity status of the group and formulate an overall plan that delivers a solution as soon as possible.

A construction site of residential buildings by Chinese developer Country Garden in Tianjin, China.  REUTERS/Tingshu Wang
A construction site of residential buildings by Chinese developer Country Garden in Tianjin, China. REUTERS/Tingshu Wang (TINGSHU WANG/)

“The company sincerely requests that creditors allow time for it to objectively evaluate the current challenges it faces and work with its advisors to formulate the best pragmatic and feasible solutions for all stakeholders,” the document states.

Liquidity pressure

The Chinese real estate developer has highlighted the liquidity pressure that its activities are experiencing, and continues to try to optimize the existing debt structure to ensure that the interests of all investors are safeguarded to the greatest extent possible.

“In an extremely difficult financial environment, the group has insisted on fulfill your obligations payment through sales collections and existing cash resources. However, he currently faces severe sales and financing challenges, and the funds available on his books continue to decline,” he acknowledged.

In this regard, it has warned that, although it has used different options, such as the disposal of assets, to obtain cash flow and continue to meet its financial commitments, in the current market environment, “it is still difficult to quickly replenish sufficient cash flow.” to improve liquidity in the short term”, resulting in the group’s cash position “remaining under significant pressure”.

(with information from Europa Press)