(Bloomberg) -- Country Garden Holdings Co. is considering a fresh holistic restructuring plan for yuan bonds after the Chinese developer struggled to raise cash for delayed debt repayments.
“The company seeks to negotiate a new debt management plan with bondholders to better align with the latest situation in the property market and corporate funding,” Country Garden told Bloomberg News on Thursday. The firm has yet to secure enough cash to repay its onshore bond principal and interest and needs to seek debt extensions, it added.
The distressed real estate company pointed to waning homebuyer demand and a deteriorating market outlook, which led to a 78% plunge in its contracted sales in the first eight months. Fund allocation restrictions also made it unable to collect enough money for payments due, the company added.
Country Garden, once China’s biggest developer by sales, has seen a sharper slowdown than its peers due to its focus on projects in smaller cities. It defaulted on dollar notes in October and has been pushing back onshore bond payment dates.
As the impact of China’s latest housing rescue package wanes, new-home sales in so-called tier-3 cities have shrunk faster, according to a note by researcher China Index Holdings. Country Garden’s year-to-date sales decline is more than double the 36.5% slide at the 100 biggest real estate companies tracked by China Real Estate Information Corp.
Country Garden’s main onshore unit proposes to push back payments due on nine yuan bonds by six months, according to people familiar with the matter. The bonds include some with payments due this month and at least one with a November deadline.
They include a third extension for payments of three notes that were first delayed in September last year. These are a 4.8% note, a 6.3% note and another 4.8% bond. Bloomberg reported the latest extension talks last week.
Bondholders will vote on the plan to delay payment on six of the bonds between Sept. 9 and Sept. 13, according to filings on the Shanghai Stock Exchange private bond disclosure platform seen by Bloomberg.
The potential payment delays would be a fresh setback for onshore bondholders, who are waiting to recoup part of their losses. It also underscores the liquidity stress that some of China’s biggest builders still face as the nation’s property crisis drags into its fourth year.
Offshore, Country Garden got a six-month respite for separate restructuring talks in July when liquidation hearing in Hong Kong was adjourned until late January. The company said at the time that it expected key creditor groups to agree on a debt term sheet by the end of September.
©2024 Bloomberg L.P.