Home Short payment terms China’s R&F fails to pay creditors after avoiding US $ 725 million default

China’s R&F fails to pay creditors after avoiding US $ 725 million default


HONG KONG: Indebted property developer Guangzhou R&F Properties said it would use $ 104 million to pay a takeover bid and fees to offshore bondholders deemed to have consented to a maturity extension of a bond of $ 725 million due Thursday.

The amount, while well below the $ 300 million the company had forecast, will still help it avoid default, as Chinese developers battle an unprecedented cash shortage caused by years of regulatory restrictions. on borrowings which resulted in several offshore debt defaults and credit downgrades.

In a stock exchange filing Tuesday, R&F said the settlement would leave $ 608.6 million outstanding on the 5.75% notes, with a six-month extension leading to a new July 13 maturity date.

Last week, the developer said it did not have enough funds for the settlement, as 95.9% of offshore ticket holders bid to resell their tickets to the company, but did not specify how much it had.

Holders who deposited would be deemed to have approved the extension of the term.

The news came on the same day that big rival Shimao Group Holdings denied a media report it had made a preliminary deal to sell a place in Shanghai, while claiming it was in talks with potential buyers to sell. certain properties.

The developer, based in the Chinese mall, said last week that it defaulted on a fiat loan after missing a payment of 645 million yuan ($ 101 million).

She is now struggling to raise funds while discussing payment terms with her creditors.

In a stock exchange filing, Shimao denied the weekend report by financial publication Caixin which said he had a preliminary pact to sell his Shimao International Plaza Shanghai to a state-owned company for more than 10 billion yuan.

However, he added that he “could consider selling certain assets if the terms and conditions are appropriate in order to reduce the group’s indebtedness.”


Fitch Ratings downgraded Shimao’s Issuer Default Rating (IDR) to “B-” instead of “BB”, citing a “lower margin of safety to preserve liquidity” after a fiduciary loan.

The downgrade follows similar action by S&P and Moody’s the day before, and Shimao’s ratings remain on Rating Watch Negative (RWN), Fitch added.

The Caixin report said Shimao has put all of its real estate projects, including residential and commercial properties, up for sale and is in talks with China Vanke to divest some assets.

Shimao is set to repay a local bond maturing on Saturday after receiving larger-than-expected cash flow from property sales in December, Bloomberg reported on Tuesday, citing people familiar with the matter.

Shimao shares canceled the initial losses to close at 0.5%, after gaining 19% in the previous session, while R&F shares rose 1.2%.

Last week, Reuters reported that a unit of the company, Shanghai Shimao Construction, had offered maturity extensions for two ABS maturing this month for a total amount of 1.17 billion yuan.

In its filing, Shimao said it did not have any outstanding Asset Backed Securities (ABS) due and payable as of Tuesday.

China Evergrande Group, expected to be China’s biggest default, saw its shares drop 0.6% as it struggles to repay more than $ 300 billion in debt. He said the voting period for a meeting of onshore bondholders will be extended until Thursday from Monday.

The developer is asking for six months to redeem and pay coupons for a 4.5 billion yuan ($ 157 million) bond.

(1 USD = 6.3715 yuan)

(Reporting by Clare Jim; Editing by Simon Cameron-Moore and Clarence Fernandez)