Country Garden gets consent to extend onshore bonds; offshore debt payment still outstanding

By Marisa Wong

Los Angeles, Oct. 10 – Country Garden Holdings Co. Ltd. issued an update on its liquidity position and the status of its outstanding debt in an announcement on Tuesday.

The company said there has not been any material industry-wide improvement in property sales. As a result, the group faces significant uncertainty regarding asset disposals, and its liquidity position is expected to remain very tight in the short to medium term.

The company explained that it has taken various measures to alleviate the liquidity pressure to minimize the impact on project construction and operations to the greatest extent. The company has tried, through proactive liability management exercises, to optimize its existing debt structure to protect the interests of all stakeholders.

The company said it has achieved significant progress in its onshore liability management. As of Oct. 10, the group has received required consents from relevant bondholders to extend the maturity of nine series of onshore corporate bonds with an aggregate outstanding principal amount of about RMB 14.7 billion, which gives the group time and space to focus on the recovery of its business operations.

While the group remains committed to trying to meet its debt repayment obligations despite adverse market conditions, there has been a continuous net cash outflow in the group’s financing activities since 2020. Whenever obtaining new financing has been extremely difficult, the company has tried to meet its repayment obligations with its sales revenue and internal cash resources.

Nevertheless, the company said, its sales and financing are still facing significant challenges, and its available funds have continued to decrease. Despite its efforts to explore various options for cash generation, such as asset disposals, in order to continue to meet its financial commitments, prevailing market conditions have made it difficult for the group to procure sufficient cash to enhance its liquidity position within a short period of time. Consequently, the group’s cash position remains under significant pressure.

As of Oct. 10, the company has not made a due payment in the principal amount of HK$470 million under some of its debt.

The company also expects that it will not be able to meet all of its offshore payment obligations when due or within the relevant grace periods, including but not limited to those under its U.S. dollar notes.

Such non-payment may lead to creditors demanding acceleration of payment of the relevant debt owed to them or pursuing enforcement action.

The company said it will actively pursue offshore liability management measures.

The company has engaged China International Capital Corp. Hong Kong Securities Ltd. (Cogard@cicc.com.cn) and Houlihan Lokey (China) Ltd. (CoGard@HL.com) as its joint financial advisors and Sidley Austin as its legal advisor.

Country Garden is a Foshan, China, real estate developer.

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