China's Country Garden targets offshore debt restructuring by year-end
Country Garden, China's leading private real estate developer, is devising a preliminary strategy to reorganize its overseas debt by the end of this year, Reuters reported. The firm, which defaulted on a coupon payment in October, intends to initiate official discussions with foreign bondholders between February and March of next year. Country Garden's offshore bonds amount to nearly $11 billion (roughly Rs. 91,623 crore).
Informing key bondholders
The company plans to share its cash flow estimates with major bondholders by the end of the year, which will form the foundation for the proposed restructuring plan. This is the first time the schedule for Country Garden's debt restructuring has been disclosed. The developer has been under scrutiny since August when its financial troubles surfaced, causing market instability and prompting Beijing to introduce additional support measures for the property industry.
Advisers begin due diligence
On October 10, Country Garden declared that it had enlisted China International Capital Corporation (CICC), Houlihan Lokey, and law firm Sidley Austin as consultants. This was done to assess its capital structure and liquidity status and devise a "holistic" approach to repay its foreign debt. The advisors have commenced due diligence on the company's financial health, including examining cash flow for domestic projects.
Other Chinese developers' debt repayment plans
So far, only a few Chinese property developers have reached agreements on debt repayment plans. In October, Sunac China Holdings Ltd. became the first to finalize a debt restructuring plan for its $9 billion (roughly Rs. 74,964 crore) overseas debt after obtaining approval from creditors and courts. Rival China Evergrande's initial $23 billion (roughly Rs. 1.91 lakh crore) foreign debt restructuring proposal, however, was disrupted in September following an investigation by Chinese authorities into its founder Hui Ka Yan.
