Chinese developer Country Garden receives winding-up petition in Hong Kong over US$204 million loan
- Country Garden received a winding-up petition filed by Ever Credit, a wholly owned unit of Kingboard Holdings, on Tuesday
- Indebted developer vows to ‘vigorously’ fight the ‘aggressive action by a sole creditor’ over a ‘low proportion’ of its offshore debts
Country Garden received a winding-up petition filed by Ever Credit, a wholly owned unit of Kingboard Holdings, on Tuesday due to non-repayment of a term loan worth about HK$1.6 billion (US$204 million) including accrued interest, according to a filing with the Hong Kong stock exchange Wednesday morning.
The first hearing is slated for May 17.
“The amount of our company’s debts involved in this case accounts for a very low proportion of the overall offshore liabilities, and the aggressive action of [a] sole creditor would not have a significant impact on our company’s guaranteed delivery of homes, normal operations, as well as the overall restructuring of overseas debts,” Country Garden said in response to a request for comment from the Post.
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“The company strongly objects to the petition and will seek legal advice and take all necessary actions to vigorously and appropriately defend against it with its advisory team.”
Kingboard Holdings issued a profit warning on February 19, citing a credit loss related to a loan made to Country Garden as one factor. The group said it expects to record a net profit of not less than HK$2.02 billion for 2023, representing a decrease of up to 45 per cent compared with 2022.
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“At present, all the operations of our company are normal, and we will continue to take the delivery and operation of the guarantee as the main goal, and protect the interests of all stakeholders including owners, creditors, investors and employees to the greatest extent,” Country Garden said in its response.
However, “transfer of shares in the company made on or after the commencement date would be void without a validation order from the High Court in the event that the company is ultimately wound up”, the company said in the stock filing.
The crisis in China’s property market, which accounts for a quarter of the country’s economy, has shown no sign of abating so far in 2024. New home prices in 70 medium and large cities fell 0.37 per cent in January, according to recent official data.
Country Garden in January hired KPMG Advisory (China) as its principal financial adviser and Sidley Austin as its legal advisor for the company’s offshore liability restructuring.
Shares of Country Garden fell 12 per cent to HK$0.63 on Wednesday. The Hang Seng Mainland Properties Index, a gauge of key Chinese developers trading in Hong Kong, dropped 3.7 per cent.
