China developer Zhonghong's shares fall to 4-year low as overdue debt rises

Renco Holdings

25/04/2018 10:11

HONG KONG, April 25 (Reuters) - Zhonghong Holding
 000979.SZ , a medium-sized Chinese property developer based in
Beijing, saw its shares fall to a near four-year low on
Wednesday after it said earlier this week its debt overdue has
now increased to 2.3 billion yuan ($363.91 million).
    Shenzhen-listed Zhonghong said in a stock exchange filing on
Monday another 1.1 billion yuan of debt has become overdue over
the past month, bringing the total to 2.27 billion yuan,
accounting for around a quarter of its 2016 net assets.
    Zhonghong, whose parent bought a 21 percent stake in U.S.
marine park operator SeaWorld Entertainment  SEAS.N  for $429
million last year, said it is in talks with lenders to resolve
the issue and is making efforts to raise funds to repay the
debts.  urn:newsml:reuters.com:*:nL3N1H1424 
    Shares of Zhonghong closed down 2.7 percent on Wednesday at
1.43 yuan, the lowest since July 1, 2014.
    Zhonghong's announcement shows that even relatively bigger
developers are not immune to the overall pressure in the
property market, Cindy Huang, director at S&P Global Ratings,
told a property sector conference call on Wednesday when asked
about Zhonghong. "We can expect more (such announcements from
firms)," she said.
    National property sales are expected to be flat or drop 5
percent this year and liquidity has become much tighter under
China's tightening policies to cool speculative activities. 
    No one at Zhonghong's headquarters in Beijing answered phone
calls by Reuters on Wednesday. The company also did not respond
to an emailed request for comment.
    Zhonghong said earlier this month it swung to a net loss of
2.5 billion yuan last year and expects to also post a net loss
in the first quarter.  urn:newsml:reuters.com:*:nH9N1RO00E
    The company is undergoing a restructuring after all the
shares held by its controlling shareholder, accounting for 26.55
percent of the company's total, were frozen by a Chinese court
earlier this year. 
    China HKBridge Holdings  2323.HK  said in February it would
set up a private equity fund to raise about 13 billion yuan to
participate in the debt, asset and shareholding restructuring of
Zhonghong, the parent company of Zhonghong Holding.
($1 = 6.3203 Chinese yuan renminbi)

 (Reporting by Clare Jim; Editing by James Pomfret and
Muralikumar Anantharaman)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))