Modern Land chairman Zhang Peng (3rd left) and his team have some giant debts to pay
Modern Land on Monday announced the appointment of financial advisors to assess the Beijing-based builder’s liquidity crunch and devise a remediation plan, joining a caravan of cash-strapped Chinese developers seeking a restructuring of delinquent debts.
In an update to the Hong Kong stock exchange, the group controlled by the Zhang family warned that its failure to repay the principal and interest on $250 million in Singapore-listed dollar-denominated notes that came due on 25 October 2021 had triggered “the possible acceleration of the repayment of certain other existing material financing arrangements”.
The outstanding principal amount of Modern Land’s offshore senior notes, including the unpaid 2021 set, is $1.35 billion, the developer said, adding that it had discussed a possible debt restructuring with the relevant noteholders, some of which have been demanding early repayment following the group’s earlier default.
“The company has appointed financial advisors to assist with its ongoing assessment of the group’s liquidity situation and has been working closely with them to formulate an overall plan for feasible remediation actions taking into account the interests of onshore and offshore stakeholders,” president and executive director Zhang Peng said in the exchange filing. “The company will monitor the situation closely and update the market as appropriate on material developments.”
Stock Nosedives
Modern Land said it also received notices from other creditors, including one demanding early repayment of outstanding principal and accrued interest in the amount of $23.6 million and declaring certain related security arrangements enforceable in connection with a facility agreement entered into with a Modern Land subsidiary.
Zhang said his team is in discussion with creditors
“The company has been in discussion with these creditors for a waiver in respect of the acceleration and/or enforcement actions,” Modern Land said.
Modern Land’s Hong Kong-listed shares tumbled 40 percent on the latest news to an all-time low of HK$0.23 ($0.03) in resumed Monday trading after a halt since 20 October of last year.
The group’s statement came one week after Sunac China Holdings’ property management unit announced the termination of an October agreement to acquire a services affiliate of Modern Land for RMB 2.27 billion ($360 million). Sunac Services cited Modern Land’s default on the offshore notes as the rationale for scrapping the deal.
On 11 October, Modern Land had asked investors for a three-month payment extension, proposing to repay a portion of the $250 million debt to avoid default, but the developer ultimately abandoned the scheme, saying the plan would not be in the best interest of the company and other stakeholders.
Misery Loves Company
Modern Land’s admittance to debt rehab comes after fellow troubled developer China Evergrande last month set up a “risk management committee” consisting of officials from the Guangdong provincial government and mainland state-owned enterprises in a bid to reorganise its own $20 billion offshore debt pile.
Evergrande last week said it was seeking a six-month delay in the repayment of principal and interest on a RMB 4.5 billion ($710 million) onshore bond that came due over the weekend. The outcome of those negotiations was unclear as of Monday evening.
Also in December, Kaisa Group Holdings acknowledged its failure to make payments on three sets of offshore senior notes and confirmed that it would work with creditors on a plan to sort out $11.8 billion in outstanding dollar bonds under the guidance of Houlihan Lokey, a US restructuring specialist already engaged by Kaisa’s compatriots at Fantasia Holdings in October.
On Monday, reports emerged that yet another embattled mainland developer, Shimao Group Holdings, was taking the radical step of putting all of its real estate projects up for sale in a bid to right the ship.
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