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Modern Land is asking investors for more time to repay a $ 250 million bond, according to a company filed with the Hong Kong Stock Exchange on Monday. Payment was due October 25. Modern Land has said it wants to extend this deadline until the end of January, as it seeks to improve “liquidity and cash flow management and avoid any potential default.”
The company said in a separate filing that Chairman Zhang Lei and Chairman Zhang Peng intended to provide around 800 million yuan ($ 124 million) in loans to support the company. Modern Land shares fell more than 2% in Hong Kong on Monday. The title is down 45% this year.
News of the company’s financial difficulties came on the same day as China’s second-largest developer Evergrande faced another debt repayment deadline, this time for around $ 148 million in interest on the bonds. denominated in US dollars, according to data from Refinitiv. Evergrande did not immediately respond to a request for comment from CNN Business.
The struggling real estate conglomerate has sought buyers for some of its businesses as a major cash crunch threatens to sink the business. China’s most indebted developer has already missed interest payments on bonds. This has fueled speculation as to whether the company could see a Beijing-backed bailout, restructuring or default.
Last week, its shares were suspended over reports that a rival Chinese developer was preparing to buy his property management business.
Beijing-based Modern Land calls itself the “leading operator of green technology industrial houses” in the country and claims to have completed nearly 200 projects in more than 50 cities in China and abroad.
The Chinese real estate sector has grown rapidly in recent years, helping to boost economic growth. The sector accounted for 29% of outstanding loans issued by Chinese banks in yuan in the second quarter of 2021. Including related industries, it now accounts for around 30% of GDP.
Last year, the Chinese government began to curb the real estate sector to curb excessive borrowing to prevent the market from overheating. Since then, Beijing has made it clear that it wants to contain the prices of leaking homes, which it has accused of worsening income inequality and threatening economic and social stability.
Fantasia Holdings, a Shenzhen-based company, also missed $ 315 million in payments to lenders last week. The luxury apartment developer said in a stock market file at the time that it was assessing “the potential impact on the group’s financial and cash position.”
– Laura He and Michelle Toh contributed to this report.
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