(Bloomberg) -- Ares Management Corp. is in the final stages of a deal to buy a majority stake in the HK$10.2 billion ($1.3 billion) project loan backing luxury apartment development The Corniche in Hong Kong.
The alternative investment manager could proceed with the official offer as soon as Wednesday, according to people familiar with the matter, who asked not to be named discussing private matters. Ares made an initial proposal of 95 cents on the dollar for the loan in April, Bloomberg News reported.
Ares has received indicative consent from lenders holding around 85% of the loan, said one of the people. Upon receipt of the offer from Ares, the banks that are willing to sell the loan, which matures at the end of August, would then seek internal approval. The process is expected to take one to two weeks, the person added.
The loan was guaranteed by now-defaulted Chinese developers Logan Group Co. and KWG Group Holdings Ltd. to fund the development of The Corniche. The project began sales in early 2023 and has sold around 30 units out of 295 as of July 10, according to its website.
Ares didn’t immediately reply to a request for comment. Calls to KWG Group’s Hong Kong and Guangzhou offices went unanswered. A person answering the phone at Logan’s Hong Kong office declined to comment.
The project loan, though not part of Logan’s restructuring plan, is pivotal for its efforts to generate cash to pay back creditors. So far the bulk of the sales at The Corniche have come after prices were slashed by as much as 40% in April. If Ares takes over the loan and Logan and KWG default, Ares would take control of the development — and cash from unit sales.
In the past few months, Deutsche Bank has also reached out to some lenders to buy part of the loan, while JP Morgan Chase & Co. was said to be in talks to arrange a refinancing loan for the distressed developers to pay back the maturing syndicated loan.
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