The creditor turns into the major shareholder; Some institutions have increased their holdings, involving HKD 270 million, and Country Garden will issue shares to offset its debt
Introduction: After the distribution, Jiantao Group held a 1.25% stake in Country Garden.
Author | Lin Caiwei from First Financial
Country Garden Holdings announced on the 30th that the company has agreed to issue 350649350 shares at a price of HKD 0.77 per share, a discount of approximately 15.38% from the previous day's closing price of HKD 0.91. This issuance will not receive cash and will only be used to offset a debt of HKD 270 million. The issuer is Jiantao Group, a Hong Kong listed company.
The shares issued by Country Garden this time are equivalent to 1.27% of the company's share capital before the issuance, and 1.25% of the expanded share capital after the issuance is completed.
Jiantao Group is an investment holding company mainly engaged in the manufacturing and sales of copper-clad panels. According to the share subscription announcement released by the group on the same day, the group entered into a financing agreement with Country Garden on December 1, 2021, lending a term loan of HKD 1.88 billion. At present, Country Garden has agreed to repay the loan of HKD 319 million, and after deducting approximately HKD 270 million from this subscription, the remaining loan principal and interest balance is approximately HKD 1.598 billion.
Jiantao Group has just released its interim results, which show that the company achieved a year-on-year decrease of 33% in revenue in the first half of the year to HKD 18.72 billion, and a year-on-year decrease of 42% in net profit attributable to shareholders to HKD 1.39 billion. This is mainly due to the decline in sales and unit prices of the group's copper clad panels and chemical products compared to the same period last year; And the delivery volume of residential properties in the real estate sector decreased during the period.
Sources close to Country Garden have revealed that this move is one of Country Garden's recent actions to liquidate debt, while Jiantao Group has become one of Country Garden's major shareholders at a lower cost.
Since the public exposure of liquidity pressure on Country Garden, the company's stock and bond prices have experienced a significant decline, and some institutions that are optimistic about the prospects of Country Garden's debt have taken action to increase their holdings in the company. For example, on August 14th, JPMorgan Chase&Co. increased its holdings of approximately 171 million shares at an average price of HKD 0.8435 per share, involving approximately HKD 144 million in capital. After the increase, JPMorgan Chase&Co. held 1.394 billion shares of Country Garden, increasing its holdings from 4.42% to 5.04%.
As for the promotion of debt extension work, on August 18th, Country Garden proposed the company's first extension plan to the holders of a private placement bond, and scheduled the first bondholder meeting from 9:00 on August 23rd to 22:00 on August 25th, 2023 to vote on the plan. Afterwards, the voting time was extended to the 31st of this month.
This bond is the "16 Biyuan 05" Panda Bond issued by Country Garden Holdings, with an issuance scale of 5.83 billion yuan and a current balance of 3.904 billion yuan. The coupon rate is 5.65% and the maturity date is September 2, 2023. It is reported that in order to avoid default, Country Garden proposed a proposal on the 29th to increase the grace period of 40 natural days for the bond.
Country Garden has proposed a three-year extension of the principal repayment plan, with a specific payment plan of paying 2% of the principal in the first, second, and third months after the bond matures, which is a total of 6% of the down payment; Pay 10% of the principal in the 12th month; Pay 15% of the principal in the 24th month; Pay 25% of the principal within 30 months; Pay the remaining 44% of the principal in the 36th month. Beyond the extension period, Country Garden has also provided credit enhancement measures by pledging equity of project companies in Fujian Longyan, Haiyang, Jiangsu Shuyang, Huai'an, and Xinghua.
It is reported that Country Garden has not reached an agreement with creditors regarding the extension of the bond, and communication is still ongoing.