(Yicai) Dec. 5 — Country Garden Holdings, once China’s biggest developer, has obtained court approval for its overseas debt restructuring plans as well as creditor approval for domestic ones, while its main management team has gone through significant adjustments.
Country Garden’s creditors approved its domestic debt restructuring plan involving nine debts worth around CNY13.8 billion (USD2 billion), the Foshan-based company announced late yesterday.
In addition, the High Court of Hong Kong approved Country Garden’s USD17.7 billion overseas debt restructuring plan, Yicai learned from sources familiar with the matter on the same day.
Completing the debt restructuring will likely enhance the confidence of homebuyers, upstream and downstream suppliers, and financial institutions in Country Garden, helping it quickly restore normal operations, Liu Shui, director of enterprise research at real estate think tank China Index Academy, told Yicai.
After the domestic and overseas debt restructuring, Country Garden’s debt is expected to reduce by more than CNY90 billion (USD12.7 billion), alleviating its burdens over the next five years, industry insiders told Yicai.
In addition, the financing costs of restructuring instruments will likely significantly decrease to between 1 and 2.5 percent, which is expected to save Country Garden a substantial amount in interest expenses and effectively alleviate cash flow pressure, the insiders noted.
“The core of these plans is to reduce debt rather than merely extend the repayment period, while it has significantly lowered the interest rates,” Liu noted. During the process, Country Garden’s controlling shareholder has fully converted over USD1.1 billion in shareholder loans into equity and signed an irrevocable commitment, which shows its determination to weather the storm with the company, Liu noted.
“Binding interests are crucial,” Liu stressed. “When the major shareholder takes the lead in bearing losses, it greatly enhances creditors’ confidence, serving as a ‘shot in the arm’ for the plan’s final approval.”
In a separate announcement on the same day, Country Garden said that President Mo Bin will be reassigned to co-chairman and be responsible for coordinating the firm’s external strategic ties and resource integration, as well as overseeing the implementation of strategies and coordinating major cross-disciplinary issues. Chairman Yang Huiyan will continue to lead the board and manage its operations, the company pointed out.
Cheng Guangyu was promoted to president from executive vice president and chief executive officer of main unit Country Garden Real Estate Group, the parent firm noted. He will be responsible for organizing, establishing, and implementing the company’s operational management system, while overseeing daily operations and administrative management.
Cheng, who turns 45 this year, has a PhD in civil engineering earned from Tsinghua University in 2007. He has held several mid-to-senior management positions at Country Garden and was appointed CEO of the subsidiary in May 2023, responsible for managing the parent company’s developer business.
In addition, Country Garden also underwent a new round of organizational restructuring, consolidating 13 property management regions into 10.
Editors: Tang Shihua, Martin Kadiev
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