Country Garden expects to reach terms with creditors in February, lawyer told court by Reuters

Written by Claire Jim

Hong Kong (Reuters) – China Country Park (HK:) expects to reach terms with creditors next month regarding the restructuring of $16.4 billion in offshore debt, and will apply for court approval of the terms in April, its lawyer told a Hong Kong court on Monday.

The real estate developer obtained a postponement until May 26 in a hearing to measure the progress of the restructuring process before a decision is made on the liquidation petition.

Hong Kong judge Linda Chan said: “Today’s postponement is to allow the company to continue making progress in its restructuring.”

Country Garden was once the largest developer in China by sales. It defaulted on $11 billion worth of foreign bonds in late 2023, deepening a debt crisis in a sector that has seen defaults by major peers including China. Evergrande (Hong Kong:) Group.

The Hong Kong High Court ordered Evergrande’s liquidation in January last year after the developer was unable to propose a debt restructuring plan acceptable to creditors.

Avoiding liquidation would allow Country Garden to return its focus to a real estate sector marred by unfinished homes and crushed buyer sentiment, and where policymakers have struggled to turn the tide with a wave of stimulus measures since 2022.

Country Garden said this month that it had proposed a restructuring that would reduce external debt by 70%, and that it had reached an “understanding” with a group of lenders.

Its lawyer on Monday asked to resolve three “sticking points” in negotiations with two main groups of creditors – a group of bondholders who hold 30% of the senior bonds in US dollars and a group of lenders consisting of seven banks.

The issues relate to the lender group issuing its own guarantee package in exchange for compensation, the conversion price of the convertible bonds, and the terms of the new bonds.

Chan said Country Garden should disclose whether it expects to reach an agreement with creditors by the end of February. If this does not happen, the parties including the petitioner and creditors can apply for the next hearing.

Ever Credit, a unit of Hong Kong-listed Kingboard, filed a petition against Country Garden in February for non-payment of a $205 million loan.