South City said in a filing that it didn’t have enough resources to pay for bond interest payment. — Bloomberg
BEIJING: China South City Holdings Ltd, partially owned by the southern city of Shenzhen, awaits a creditor vote result that would allow the developer to extend bond interest payment deadlines or risk becoming the latest defaulter in the beleaguered industry.
Creditors are huddling for the vote as the grace period for an interest payment on the company’s 9% notes due July 2024 – with US$235mil of principal outstanding – ended yesterday.
South City said in a Monday filing that it didn’t have enough resources to pay for it.
To get relief, the company would need the result, expected to be announced later yesterday, to show that a certain amount of votes – representing at least 75% of the outstanding amount for each of five dollar bonds – opted to extend the maturity and lower the interest rates, according to the Monday filing.
The bonds collectively have US$1.35bil of principal outstanding.
The company’s disclosure further casts doubt on Chinese authorities’ recent vows to support distressed developers and curb an unprecedented wave of defaults.
It could also test investors’ wavering faith that state-backed developers would be preferred over private sector counterparts in government support.
In September, Chinese state-linked developer Sino-Ocean Group Holding Ltd suspended payment on all of its offshore borrowings, citing tight liquidity.
Earlier this month, Dong Jianguo, vice-minister of Housing and Urban-Rural Development, vowed to “forcefully” prevent developers from defaulting on their debts “all at once,” state broadcaster China Central Television reported.
Some Chinese developers’ 11th-hour talks with creditors have resulted in relief. South City was still short of the votes needed as of Monday, saying in the filing that it only had 69.8% of the 75% needed on its request to extend the maturity and lower interest rates on the five bonds.
China South City – partially owned by Shenzhen SEZ Construction and Development Group Co, a unit of the southern city’s local state asset regulator – was among the first in the country’s property sector to receive a state bailout. — Bloomberg
