The distressed builder suspended trading in nearly a dozen onshore bonds on Monday , paving the way for debt negotiations and a. Investment bank China International Capital Corp has been engaged to explore options for the company, including extending some soon-to-mature yuan notes.
As of the 2022 year-end, Country Garden held 87 billion yuan in unrestricted cash, excluding that in escrow accounts. That money will probably be used to deliver unfinished projects, rather than shifted to repay some hidden debt somewhere. By the company’s own account, it needs about 28 billion yuan to 30 billion yuan in sales a month to generate enough cash and be able to finish pre-sold projects. However, it hasn’t hit the break-even point this year, and the past few months have been even worse.
In China, capital-intensive real estate development is long past its prime, while property management and services are the future. Indeed, in the first half, Country Garden Services Holdings Co is expected to report up to 2.6 billion yuan in net profit, while the troubled development unit may see up to 55 billion yuan in net loss.
Source: Loan Digest (loandigest.net)