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New World Development offers to buy back US$600 million of bonds after completing a US$2.8 billion asset sale to controlling family

  • New World offers to buy back up to US$600 million of its dollar-denominated bonds by Dutch auction in effort to manage debt load
  • Developer this week completed the sale of its entire stake in NWS Holdings to its controlling family for HK$21.8 billion (US$2.8 billion)

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New World Development’s residential project atop the Tai Wai MTR Station in Hong Kong Photo: Xiaomei Chen
Jiaxing Li
New World Development offered to buy back as much as US$600 million of its outstanding dollar-denominated debt through a public tender to manage its debt load, days after receiving HK$21.8 billion (US$2.8 billion) from an asset sale to its controlling family.
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The Hong Kong developer offered to repurchase part of five bonds maturing between 2027 and 2031 and two perpetual securities with a combined outstanding face amount of US$4.14 billion, according to a stock exchange filing on Thursday. The offer prices exclude accrued interest on the bonds.

The cash offer will be based on a modified Dutch auction, meaning the developer will accept lowest prices first until the maximum buyback amount is reached. The offer closes on December 1 with results expected on December 4, barring any extension. The firm may choose not to accept any of the offer tendered by bondholders, it added.

(Left to right): Adrian Cheng Chi-kong, executive vice-chairman and Henry Cheng Kar-shun, chairman, of New World Development, seen during a media briefing in February 2019 in Wan Chai, Hong Kong. Photo: Winson Wong
(Left to right): Adrian Cheng Chi-kong, executive vice-chairman and Henry Cheng Kar-shun, chairman, of New World Development, seen during a media briefing in February 2019 in Wan Chai, Hong Kong. Photo: Winson Wong

“The rationale is to optimise the cost of capital and debt profile,” chairman Henry Cheng Kar-shun said in the exchange filing. “The offer also provides liquidity to investors at premium to market price.”

Goldman Sachs, HSBC, Mizuho Securities and UBS have been appointed as dealer managers, while Orient Securities will be co-dealer manager.

“The buyback is a positive catalyst to support bond prices and refinancing its maturing bonds,” said Tommy Kung, an analyst at KGI Asia. Still, the plan would have a “limited impact” on its financial position, as the buy-back amount is small relative to US$24.3 billion of its interest-bearing debt, he added.

New World, controlled by Hong Kong’s third-richest billionaire family led by the 76-year old Cheng, has been looking to cut its debts as sliding home prices and higher borrowing costs pressured its finances. The developer this week completed the sale of its 60.9 per cent stake in NWS Holdings to a family-owned entity for HK$21.8 billion.

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