China’s Country Garden Faces Challenges in Meeting Offshore Payment Obligations
Debt Restructuring Poses Challenges for Country Garden Holdings
China’s Country Garden Holdings, the largest private property developer in the country, is facing difficulties in meeting its offshore payment obligations. The company has expressed concerns about its ability to fulfill these obligations within the specified timeframes or grace periods. This announcement comes as Country Garden grapples with debt restructuring.
Consequences of Non-Payment
In a recent exchange filing, Country Garden warned that non-payment could lead to creditors demanding accelerated payment or pursuing enforcement actions. The company acknowledges that it may not be able to meet all of its financial obligations due to the uncertainty surrounding its asset disposal and the ongoing pressure on its cash position.
Liquidity Challenges and Debt Restructuring
Country Garden further emphasized that its liquidity position is expected to remain extremely tight in the short- to medium-term. The company currently holds $10.96 billion in offshore bonds and 42.4 billion yuan ($5.81 billion) in loans not denominated in yuan. If Country Garden defaults on its payments, these debts will need to be restructured, and the company’s assets may be at risk of liquidation by creditors.
Sales Performance and Financial Struggles
Amidst these challenges, Country Garden reported a significant decline in contracted sales. In the nine months leading up to September, the company recorded contracted sales of approximately 154.98 billion yuan. This represents a substantial drop of about 43.9% and 65.4% compared to the corresponding periods in 2022 and 2021, respectively.
Despite these difficulties, Country Garden remains committed to navigating its financial hurdles. The company is actively exploring avenues to address its debt and improve its financial position. However, the road ahead remains uncertain, and Country Garden will need to make strategic decisions to overcome its liquidity challenges and restore stability.
