Country Garden submits offshore debt restructuring plan to creditors, sources say

PJT Partners

18/11/2024 03:50

* 
      Debt revamp proposal presented to offshore creditors last
month
    

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      Proposal projects lower cash flow compared to previous
forecast
    

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      Country Garden faces next liquidation court hearing on
Jan. 20  
  
    

  
    By Xie Yu and Clare Jim
       HONG KONG, Nov 18 (Reuters) - Country Garden  2007.HK 
submitted the preliminary terms of its offshore debt
restructuring proposal to some creditors late last month, said
five sources familiar with the matter, as the indebted Chinese
property developer tries to avoid liquidation.
    The restructuring proposal includes a revised cash flow
projection, said two of the sources who have direct knowledge
and another person familiar with the matter, a standard part of
a debt restructuring process to show creditors the firm's
ability to meet its obligations.
    The projection shows the developer expects a weaker cash
flow in coming years compared with the estimates it had shared
with some offshore creditors earlier this year, two of the
sources said.
    Details of the cash flow projection were not immediately
known.
    The sources declined to be identified as they were not
authorised to speak to the media.
    A spokesperson for Country Garden did not immediately
respond to Reuters request for comment. 
        Once China's biggest developer, Country Garden defaulted
on its $11 billion in offshore bonds late last year and is
fighting a liquidation petition in Hong Kong. The next court
hearing has been set for Jan 20, 2025.
    Country Garden's revised cash flow outlook comes after the
government has rolled out a raft of measures over the past year
to revive the property sector, which has slumped in recent years
as developers succumbed to a mountain of debt.
    China's new home prices in October fell the most
year-on-year since 2015, while property investment declined
10.3% in the first 10 months of 2024, official data showed on
Friday, suggesting the support measures have had little impact
so far.
    The finance ministry last week introduced new tax incentives
to further lower the cost of home purchases and spur demand --
its latest support effort. China also cut benchmark lending
rates by 25 basis points in October to try to boost demand.
    At a hearing in July, Country Garden told the Hong Kong High
Court that it expected to publish the term sheets for a revamp
of its offshore debt to creditors in September and that it
planned to seek approval from the court on that arrangement
early next year. The company missed the September deadline.
    If Country Garden can gain support from its key creditors
for the restructuring proposal before the January court hearing,
it would pave the way for the company to seek more time from the
court to implement a restructuring plan.
    PJT Partners  PJT.N , a financial adviser representing the
main group of Country Garden's offshore bondholders for the debt
restructuring talks, did not immediately respond to request for
comment.  

 (Reporting by Xie Yu and Clare Jim, additional reporting by
Scott Murdoch in Sydney; Editing by Sumeet Chatterjee and Neil
Fullick)
 ((Yu.Xie@thomsonreuters.com;))