China's Jinke Property files reorganisation application in court, shares rise

Jinke Smart Services Co

22/02/2024 05:29

HONG KONG, Feb 22 (Reuters) - Embattled Jinke Property
Group  000656.SZ  said it had applied to a court for a company
reorganisation to resolve its debt risks, becoming one of the
first well known Chinese developers to take such a route to try
and restore its financial standing.
    Shenzhen-listed shares of Jinke, the country's 50th largest
property developer by sales, rose 2.5% by midday on Thursday,
after jumping as much as 9.4% earlier in the session. Its Hong
Kong-listed property management unit, Jinke Smart Services
 9666.HK , slipped 1.2%. 
    Many Chinese property developers have defaulted on their
debt obligations since mid-2021, with most of them focusing on a
debt restructuring rather than a company reorganisation. 
    China Evergrande Group  3333.HK , the world's most indebted
property developer, was ordered by a Hong Kong court to
liquidate last month after it failed to make progress on its
offshore debt restructuring. 
    Jinke said in a filing late on Wednesday it has officially
submitted an application to a court in the southwestern city of
Chongqing, and a successful reorganisation would improve its
balance sheet and continuous operating ability. 
    If the reorganisation failed, however, the company warned it
could face bankruptcy and a delisting.
    The Chongqing-based private developer, with $1.6 billion
worth of onshore bonds, first defaulted on a yuan debt tranche
in May 2022. 
    In May 2023, Chongqing Hengrui Constructional Engineering, a
Jinke supplier, filed a bankruptcy reorganisation petition
against the developer in a court, but the petition has not been
processed by the court, according to local media.
    Last July, the developer entered into an agreement with a
unit of state-owned Great Wall Asset management under which the
unit would take part as a strategic investor in Jinke's
prepackaged reorganisation process. 

 (Reporting by Clare Jim; Editing by Muralikumar Anantharaman)
 ((clare.jim@thomsonreuters.com;))