807 Billion Won Debt Repayment Due
Possibility of Inability to Repay Within Grace Period Indicated
Asset Disposal Challenges Due to Unsold Housing
Country Garden (Biguiyuan) Group, China's largest real estate developer, has officially announced that it is unable to repay its offshore debt by the maturity or grace period. The company has also appointed restructuring advisors to investigate its liquidity status in order to dispose of its assets.
On the 10th, Country Garden Group stated in a report submitted to the Hong Kong Stock Exchange, "It is expected that all offshore debts will not be fulfilled within the maturity or grace period." According to the Chinese media Zaijie Jingji, Country Garden had debts amounting to HKD 470 million (approximately KRW 80.78 billion) due by that day but failed to repay the principal.
Country Garden added, "Due to non-payment of offshore bonds, creditors may urge rapid debt repayment or request enforcement actions."
To investigate the group's capital structure and liquidity status, Country Garden appointed China International Capital Corporation (CICC), Chinese investment bank Huorihan Loki, and law firm Sidley Austin as advisors. Bloomberg explained, "Appointing advisors related to restructuring is often a step taken by distressed companies seeking broad debt restructuring."
Currently, Country Garden's offshore debt amounts to USD 10.96 billion (KRW 14.7 trillion), and its non-Renminbi-denominated debt reaches CNY 42.4 billion (KRW 7.8 trillion).
Earlier in August, Country Garden faced a default crisis after failing to repay USD 22.5 million in interest on dollar-denominated bonds. It overcame the crisis by repaying the amount within a 30-day grace period. However, with interest payments of USD 66.8 million due on bonds maturing in 2024 and 2026, the company is facing difficulties again.
According to major foreign media, Country Garden must also repay USD 15 million in interest on other bonds by the 17th. Failure to pay this interest is expected to lead to a default on all offshore bonds.
Country Garden is also facing uncertainty regarding asset disposals due to unsold housing inventory. Last month, Country Garden's housing sales plummeted by 80.7% compared to the same period last year.
Bloomberg reported that Country Garden's creditors have not yet made specific decisions regarding this matter. As concerns over Country Garden's default have emerged, the creditor group has formed a separate temporary organization and has been in discussions with global investment advisory firm PJT Partners and others.
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