Country Garden has overcome the "first level of self rescue" and the key resolution has been passed

Country Garden achieved a phased victory in self rescue.

The reporter learned from insiders that on the evening of September 1st, the extension plan for the domestic bond "16 Country Garden 05" under Country Garden was finally approved. This domestic corporate bond with an amount of 3.904 billion yuan was originally due on September 2nd.

This is also Country Garden's first domestic bond seeking an extension, and the approval of the plan also means Country Garden has a brief respite.

It is worth noting that the grace period for the payment of interest on the two cross-border foreign debts that Country Garden has previously been highly concerned about will end on September 5th. These two foreign debt interest payments have previously become the trigger for the debt crisis in Country Garden. According to the reporter's understanding, Country Garden is still actively laying out.

The bond has been extended for three years

According to the data, "16 Country Garden 05" is the abbreviation for the non-public issuance of corporate bonds by Country Garden Holdings Limited in 2016, with an issuance scale of 5.83 billion yuan and a current balance of 3.904 billion yuan, a coupon rate of 5.65%, and a maturity date of September 2, 2023.

As early as the evening of August 12th, several bonds under Country Garden were suspended, including "16 Country Garden 05". The first bondholder meeting for this bond will be held from August 23rd to August 25th. Subsequently, the voting time for the first meeting of bondholders of "16 Biyuan 05" was extended to August 31st.

On August 31st, Country Garden once again released an extension plan for the voting of the bond, extending it to 22:00 on September 1st. The final extension plan for "16 Biyuan 05" has been approved. This also means that Country Garden will ultimately receive an extension before the breach of contract.

The reporter learned from informed sources about the extension plan for "16 Biyuan 05". According to the plan, Country Garden will pay interest after the debt matures, extend the principal period for 3 years, and adjust the principal redemption time from September 2, 2023 to September 2, 2026. Each account will receive a "small redemption" of 100000 yuan.

In addition, 2% of the principal shall be paid in the first, second, and third months after maturity, and 10% of the principal shall be paid in the twelfth month; Pay 15% of the principal in the 24th month, 25% in the 30th month, and the remaining 44% in the 36th month.

In addition to the extension period, Country Garden has also provided credit enhancement measures, using projects such as Longyan in Fujian, Shuyang in Jiangsu, Huai'an, and Xinghua as equity pledges.

It is worth mentioning that prior to this, Country Garden specifically proposed the establishment of "insurance" measures to prevent substantial breach of contract.

It is understood that Country Garden has proposed that, given that all bondholders are institutional investors, more ample time should be reserved for internal communication, discussion, decision-making, and the use of seals on voting materials. Therefore, the company has proposed a proposal to increase the grace period by 40 natural days, requesting bondholders to agree to grant the company a grace period of 40 natural days for the principal and/or interest of "16 Biyuan 05" due on September 2. It is reported that the proposal has also been passed before.

Two foreign debt interest payment nodes are approaching

This crucial extension has been approved, giving Country Garden a breathing opportunity. So far, this struggling real estate giant has not substantially defaulted.

However, Country Garden will face another "challenge" next. On September 5th, the grace period of 30 days for two US dollar bonds of Country Garden, totaling $22.5 million, will also end if they are not paid on time. According to insiders, Country Garden is still actively laying out.

The payment of these two interest payments was the trigger for the debt repayment controversy of Country Garden. As early as August 8th, market news reported that some offshore bondholders of Country Garden had not yet received the above-mentioned USD bond interest payable by Country Garden on August 7th.

These two bonds are Country Garden 4.2% N20260206 and Country Garden 4.8% N20300630, respectively. Two bonds are listed on the Singapore Stock Exchange, each with an issuance size of 500 million US dollars and maturities of 5.5NC3.5 and 10NC5, respectively, with maturities on February 6, 2026 and August 6, 2030.

According to public information, there are currently not many domestic bonds of Country Garden that mature within the year. There is only one corporate bond, 19 Bidi 03, with a current balance of 990 million yuan. This debt will mature on November 20th of this year.

Make multiple attempts to overcome difficulties

Recently, Country Garden also released its interim report. Country Garden stated in its interim report that due to the downturn in the real estate market, its pre-sale performance is facing significant challenges, especially since April 2023, when the company's pre-sale performance has significantly declined, and as of the date of the release of interim financial data, there are no obvious signs of rebound.

In addition, due to the challenging and challenging debt financing environment, the company also faces more difficulties in obtaining financing through the issuance of new domestic corporate bonds and overseas senior notes. During the reporting period, Country Garden achieved a total revenue of approximately RMB 226.31 billion, an increase of approximately 39.4% compared to the same period in 2022, and a loss attributable to the company's shareholders of approximately RMB 48.932 billion.

It can be observed from the financial report that Country Garden is under significant debt repayment pressure. As of mid-2023, its total borrowing balance has decreased by 4.9% compared to the end of last year to 257.9 billion yuan, with a net borrowing ratio of 50.1%. Affected by the continuous deterioration of sales revenue and weak refinancing environment within the year, Country Garden's available funds on hand continued to decrease, with a total of 130.569 billion yuan, a decrease of nearly 17 billion yuan from the end of 2022.

Country Garden also stated that it will continue to actively adjust its sales and pre-sale activities to respond to market changes and grasp demand. We will also continue to take measures to accelerate the collection of sales receipts and other receivables, and strive to revitalize underperforming assets, including hotels, office buildings, and shops. When necessary, we will consider disposing of their investments in property development projects to generate more cash inflows.

Recently, Country Garden has also made various attempts in self rescue.

In terms of revitalizing its assets, on August 25th, Country Garden sold its 26.67% equity stake in the Guangzhou Asian Games City project to CNOOC Real Estate for 1.292 billion yuan, and received approximately 700 million yuan in cash after deducting accounts payable.

In addition, prior to the trading session on August 30th, Country Garden entered into a subscription agreement with a wholly-owned company of Jiantao Group, which subscribed for approximately 351 million shares of Country Garden at a price of HKD 0.77 per share, with a total subscription consideration of approximately HKD 270 million to offset the debt. Due to the fact that Jiantao Group's wholly-owned company has previously provided loans to Country Garden, this new share issuance is equivalent to a "debt to equity conversion".

The management of Country Garden promised in its financial report, "We will definitely adhere to corporate social responsibility, strive to fulfill our commitments to the owners and society, actively solve problems, and resolutely not lie flat. Objective external difficulties will not be a reason for the company to stop moving forward."

As of the end of August, the market value of Country Garden Hong Kong stock was HKD 24.6 billion.