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Chinese developer R&F says just about funds to handle the bond offering

The logo of Guangzhou-based real estate developer R&F Properties is pictured at a strategic cooperation signing ceremony in Beijing, China on July 19, 2017. REUTERS / Jason Lee

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HONG KONG, Jan 6 (Reuters) – Chinese developer Guangzhou R&F Properties (2777.HK) said it did not have sufficient funds to buy back a $ 725 million bond because sales of its assets did not go as planned .

In a filing late Wednesday, it said the funds available to complete the takeover bid for the offshore bond were well below the originally expected $ 300 million due to ongoing volatility in the real estate sector.

R&F asked its 5.75% bondholders last month to approve an extension of the January 13 bond by six months as part of an effort to “improve its overall financial condition.” Continue reading

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As part of a takeover bid, the developer also proposed two options: buying back the banknotes at a discount of 17%, or $ 830 for every $ 1,000 in capital; or repurchase at most half of the Notes in full, both with accrued interest.

China’s real estate developers have struggled to overcome tight liquidity conditions in recent months as the government cracks down on excessive borrowing and speculation in the sector.

R&F said in the filing that 71.7% of bondholders had offered for the first option, while 24.2% offered for the second – but it expects it will have “significantly less” than $ 300 million to get the entire Buy back bond.

“Proceeds from certain asset sales that the group is considering may not arrive by the settlement date,” it said, adding that the settlement date has been postponed by two days to approximately January 12th.

In last month’s document, the company said it would accept bonds on a pro-rata basis and any bonds not accepted for purchase would be returned to bondholders. And holders who have submitted an offer are deemed to have approved the term extension.

“Despite the delays in certain expected asset sales, the group continues to take active steps to support its liquidity position until the settlement date,” added R&F in Wednesday’s filing.

The developer’s total borrowing at the end of June was 143.4 billion yuan ($ 22.50 billion), according to its half-year financial report.

The bond in question fell 61.5 cents against the dollar from 66.5 overnight in Asia on Thursday afternoon, while an R&F yuan bond maturing in April 2022 plunged 10%.

R&F shares, listed in Hong Kong, rose 1% at 0600 GMT, versus a 0.4% decline in the broader market (.HSI).

($ 1 = 6.3736 Chinese Yuan)

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Reporting from Clare Jim; Editing by Jacqueline Wong

Our Standards: The Thomson Reuters Trust Principles.

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