Chinese developer Country Garden faces crunch vote on debt repayment
Source: AFP
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China's biggest developer Country Garden on Thursday faces a crunch vote on extending debt repayment terms that could determine whether it defaults, plunging the country's property market deeper into turmoil.
One of China's biggest builders, the firm has racked up debts of more than $150 billion and this week reported a record 48.9 billion yuan ($6.7 billion) loss for the first six months of the year.
The group warned Wednesday that it faced a default if its financial performance "continues to deteriorate", adding it "felt deeply remorseful for the unsatisfactory performance".
Bondholders are due to conclude a crunch vote Thursday on whether to extend repayment on a key note worth $535 million.
Creditors have until 10 pm (1400 GMT) to decide on a proposal to postpone this payment, according to Bloomberg.
The vote was originally scheduled to end last Friday, but was delayed at the last minute.
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If the plan is refused, Country Garden could become the biggest Chinese real estate firm to default since rival Evergrande in 2021.
Deepening its troubles, it also faces a deadline for two separate bond payments at the beginning of September worth a total of $22.5 million.
The company's woes appeared to have not affected traders Thursday, with its shares rising 6.8 percent in Hong Kong.
But Country Garden's cash flow problems have ignited fears that it could collapse and spread further contagion through China's economy, which is already suffering from record high youth unemployment and flagging consumption.
The nation's economic rise has been largely founded on property and construction, which account for about a quarter of gross domestic product.
But a years-long government credit crunch and crippling debts among many developers have hit the sector hard.
Country Garden has four times as many projects as its competitor Evergrande, whose stalled development led to protests and payment strikes last year.
It has extensive operations in small cities, which host about 60 percent of its projects.
But that is where recent drops in China's property prices have been most pronounced and where customers have limited purchasing power.
At the end of 2022, Country Garden listed more than 3,000 active construction sites, including around 30 abroad, mainly in Australia, Indonesia and the United States.
Any prolonged suspension of work at the sites could threaten social unrest, as Chinese homeowners often pay for new properties even before the building is fully constructed.
Source: AFP
