Chinese developer Country Garden receives winding-up petition in Hong Kong over US$204 million loan

Chinese developer Country Garden receives winding-up petition in Hong Kong over US$204 million loan

Chinese developer Country Garden receives winding-up petition in Hong Kong over US$204 million loan

Embattled Chinese developer Country Garden faces a winding-up petition in Hong Kong, months after the company started what is expected to be the second-largest restructuring effort among its peers, following that of China Evergrande Group.

Country Garden received a winding-up petition filed by Ever Credit, a wholly owned unit of Kingboard Holdings, on Tuesday due to non-repayment of a term loan worth about HK$1.6 billion (US$204 million) including accrued interest, according to a filing with the Hong Kong stock exchange Wednesday morning.

The first hearing is slated for May 17.

“The amount of our company’s debts involved in this case accounts for a very low proportion of the overall offshore liabilities, and the aggressive action of [a] sole creditor would not have a significant impact on our company’s guaranteed delivery of homes, normal operations, as well as the overall restructuring of overseas debts,” Country Garden said in response to a request for comment from the Post.

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“The company strongly objects to the petition and will seek legal advice and take all necessary actions to vigorously and appropriately defend against it with its advisory team.”

The petition comes after the developer – once China’s largest by sales – defaulted on a dollar bond in October, causing jitters in the both the bond and stock markets given the scale of the company’s projects. A Hong Kong court ordered the liquidation of China Evergrande Group, the world’s most indebted property developer, in late January.

Kingboard Holdings issued a profit warning on February 19, citing a credit loss related to a loan made to Country Garden as one factor. The group said it expects to record a net profit of not less than HK$2.02 billion for 2023, representing a decrease of up to 45 per cent compared with 2022.

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“At present, all the operations of our company are normal, and we will continue to take the delivery and operation of the guarantee as the main goal, and protect the interests of all stakeholders including owners, creditors, investors and employees to the greatest extent,” Country Garden said in its filing.

However, “transfer of shares in the company made on or after the commencement date would be void without a validation order from the High Court in the event that the company is ultimately wound up”, the filing added.

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