From the Asian real estate mavens at Mingtiandi, February 21:
Zhenro Asks Bond Creditors Not to Sue as Developer Crisis Continues
Zhenro Properties, a top 30 Chinese developer by contracted sales, jolted investors late last week with the news that it was asking holders of a $200 million bond due in March to refrain from default claims as the company deals with a cash crunch.
The Shanghai-based builder had announced in early January that it would fully redeem the senior perpetual note. But since then it experienced short-term liquidity pressure due to limited access to external capital to refinance its existing indebtedness, it said Friday in a filing with the Hong Kong stock exchange.
Zhenro also experienced “a noticeable decline” in its contracted sales in recent months, including a 29.5 percent year-on-year plunge in January. The company has called a 14 March meeting at which it will formally ask shareholders to waive claims against Zhenro if it fails to redeem the note on time.
“The company anticipates that the market condition in the real estate sector remains under pressure in 2022, and therefore, in the absence of a sharp recovery in the market and a resurge of various financing options, the company remains cautious about its liquidity in the near term,” Zhenro chairman Huang Xianzhi said in the HKEX filing.
Reversal of Fortune
Zhenro’s shares and bonds had slumped in the last 10 days amid market chatter that the company might struggle to redeem the $200 million bond....
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