By Clare Jim
HONG KONG (Reuters) -China’s Country Garden (HK:) expects to reach terms with creditors next month regarding the restructuring of $16.4 billion in offshore debt, and apply for court approval of the terms in April, its lawyer told a Hong Kong court on Monday.
The property developer was granted an adjournment until May 26 in a hearing held to gauge the extent to which restructuring is proceeding ahead of a decision on a liquidation petition.
“Adjournment today is to allow the company to continue to make progress on the restructuring,” Hong Kong justice Linda Chan said.
Country Garden was once China’s biggest developer by sales. It defaulted on $11 billion in offshore bonds in late 2023, deepening a debt crisis in a sector that had seen defaults by major peers including China Evergrande (HK:) Group.
Evergrande was ordered by the Hong Kong High Court to liquidate in January last year after the developer was unable to propose a debt restructuring plan acceptable to creditors.
Averting liquidation would allow Country Garden to return its focus to a property sector blemished by unfinished homes and shattered buyer sentiment, and where policymakers have struggled to turn the tide with a wave of stimulus measures since 2022.
Country Garden said this month it has proposed restructuring that would cut offshore debt by 70% and that it had reached an “understanding” with a lender group.
Its lawyer requested on Monday time to resolve three “sticky points” in negotiation with two major groups of creditors – a group of bondholders with 30% of outstanding U.S. dollar senior notes and a group of lenders comprised of seven banks.
The issues relate to the lender group releasing its security package in exchange for compensation, the conversion price of convertible bonds and the terms of new notes.
Chan said Country Garden should disclose whether it expects to reach an agreement with creditors by February-end. If it does not, parties including the petitioner and creditors can apply to bring the next hearing forward.
Ever Credit, a unit of Hong Kong-listed Kingboard , filed a petition against Country Garden in February for not repaying a $205 million loan.
