Embattled mainland Chinese property developer Country Garden Holdings was given a reprieve of almost six month to come up with a debt plan, after a Hong Kong court adjourned a winding-up hearing and asked it to come up with a restructuring blueprint.
Justice Linda Chan on Monday adjourned the case to January 20, 2025, after hearing a litigation by Ever Credit, a unit of Hong Kong-listed laminates and chemicals producer Kingboard Holdings. This is the second time that the court has adjourned the hearing after Ever Credit filed a petition in February to liquidate the firm and recover a HK$1.6 billion loan and the interest accrued on it.
A lawyer representing Country Garden told the court that the developer expected to release restructuring term sheets by the end of September, which will be followed by a Restructuring Support Agreement (RSA).
The company is required to submit the RSA to the court sin earlier January, ahead of the next hearing, according to the court.
The hearing also came amid a growing list of Chinese defaulters that are facing winding-up suits as they struggle to negotiate with creditors and avoid the fate of China Evergrande Group, the world’s most indebted property developer, which was ordered to be liquidated by a Hong Kong court in January.
Country Garden’s peer Shimao Group Holdings faces a winding-up hearing this Wednesday, and Kaisa Group Holdings awaits a court decision on a similar case two weeks later. Sino-Ocean, a state-backed developer, faces a court hearing in September.
The Foshan-based developer had 1.36 trillion yuan (US$187 billion) in total liabilities on June 30, 2023, according to its latest published accounts. They included 258 billion yuan of bonds and bank borrowings.
It has not filed its 2023 annual accounts by the April 30 deadline following which its shares have been under trading suspension under the city’s stock exchange listing rules. Before the suspension, the shares had lost 72 per cent of their value from a year ago.
The hearing came amid mild growth in China’s home market after Beijing announced a historical rescue package in May, which included a 300 billion yuan relending facility to buy unsold homes. This is yet to translate into a turnaround for the property sector, which contributed to about a quarter of the country’s economic growth at its peak.
The top 100 Chinese developers reported home sales of 438.9 billion yuan in June, rising 36.3 per cent month on month, thanks partly to the low base in May. Still, it was 16.7 per cent lower than in June last year.
Country Garden reported 4.3 billion yuan of contracted home sales for June, almost unchanged from its May sales of 4.29 billion yuan.