(Bloomberg) -- Chinese developer Country Garden Holdings Co. has missed a self-imposed target date for getting key creditor support for terms of its restructuring plan, people familiar with the matter said.
The builder, whose default on dollar debt a year ago underscored the depth of the country’s years-long property crisis, hasn’t yet delivered a term sheet for its restructuring, according to the people, who asked not to be identified. That’s despite saying several months ago that it expected key creditor groups to agree on the terms by the end of September.
Country Garden’s difficulties in meeting a milestone date in its restructuring underscore the complexity of developing a proposal and the challenges that remain for the sector, despite the government’s latest stimulus efforts. The stakes are high, as companies that are unable to come up with viable debt plans face the risk of eventual liquidation.
The company has given creditor groups financial data, including a cash-flow analysis, the people said. Such assessments are a key part of a defaulter’s debt plan as they lay out projections for how much money a company expects to generate to allow it to repay debt.
At a winding-up hearing earlier this year, the company said it expected key creditor groups to agree on a debt term sheet by the end of September. It also said it planned to make a restructuring support agreement publicly available to all creditors by October.
A representative for Country Garden told Bloomberg News late Tuesday that discussions on details of the restructuring are ongoing and the company is making good progress.
The judge adjourned the liquidation hearing in July, giving the company six months of breathing room before the next hearing.
After defaulting on dollar bonds last year, Country Garden has continued to struggle amid a prolonged property crisis. In August, the company’s contracted sales plunged 57% to 3.43 billion yuan ($489 million) from a year earlier, following a 72% slide in July, according to an exchange filing.
In September, it won approval from onshore bondholders to push back payments on its nine yuan bonds by six months. The payment delays gave the company more time to work on its restructuring, but also meant that onshore bondholders would have to wait longer to recoup part of their losses from the developer.
Country Garden’s 2.7% dollar bond due 2026 was up 3.3 cents on the dollar to 10 cents last week, the highest since last September before it officially defaulted. The gain came amid a recent sector-wide rally of equities and bonds after the country’s top leaders called for measures to revive growth, pledging to stabilize the beleaguered property sector.
Chinese officials on Tuesday expressed confidence that the country would reach economic targets this year and promised to further support growth, but they held back on more major stimulus in a disappointment to investors.
--With assistance from Emma Dong.
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