Chinese developer R&F says short of funds to settle bond tender offer

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HONG KONG: Chinese developer Guangzhou R&F Properties mentioned it didn’t have adequate funds to purchase again a $725 million bond as gross sales of its property had not come by as deliberate.

It mentioned in a submitting late on Wednesday that the funds out there to settle its tender offer for the offshore bond was materially lower than the $300 million it beforehand anticipated, due to continued volatility within the property sector.

R&F sought consent from bondholders of the 5.75% notes final month to lengthen maturity of the bond due Jan. 13 by six months, as half of efforts to “enhance its total monetary situation”.

The developer additionally proposed two choices below a tender offer: shopping for again the notes at a 17% low cost, or $830 for each $1,000 in principal; or shopping for again at most half of bondholders’ notes in full, each with accrued curiosity.

China’s actual property builders have been struggling to overcome tight liquidity situations prior to now few months due to the federal government’s clampdown on extreme borrowing and hypothesis within the sector.

R&F mentioned within the submitting that 71.7% of the bondholders had tendered for the primary choice, whereas 24.2% for the second – but it surely expects it has “materially much less” than $300 million to purchase again all of the bond.

“Proceeds from sure asset gross sales contemplated by the group could fail to materialise by the settlement date,” it mentioned, including the settlement date has been postponed by two days to round Jan. 12.

In the doc final month, the agency mentioned it could settle for tenders of notes on a professional rata foundation, and any notes not accepted for buy can be returned to the bondholders. And holders who’ve tendered can be deemed to have accepted the maturity extension.

“Despite the delays within the progress of sure anticipated asset gross sales, the group is continuous to take lively measures to shore up its liquidity place up to the settlement date,” R&F added within the Wednesday submitting.

The developer’s complete borrowings on the finish of June had been 143.4 billion yuan ($22.50 billion), in accordance to its half yr monetary report.

The bond in query dropped to 61.5 cent on the greenback in Asia afternoon hours on Thursday, from 66.5 in a single day, whereas a R&F yuan bond due April 2022 plunged 10%.

Shares of R&F listed in Hong Kong had been up 1% at 0600 GMT, versus a 0.4% drop within the broader market. – Reuters



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