It struck a deal to sell a minority stake in a property development, and it agreed to issue new shares at a discount to a creditor who is owed hundreds of millions of dollars from Country Garden. The company also reached an agreement with holders of its $537 million bonds denominated in yuan, the Chinese currency, that were due last week, to delay repayment of the debt for three years.
The company said it must repay nearly $15 billion in debt within the next 12 months in the form of bonds, notes, and bank and other borrowings. Country Garden’s debt due within the next year is more than its current $13.9 billion in cash and cash equivalents.
Once considered a model company in China’s property industry, Country Garden’s cash crunch is the latest signal of the country’s worsening real estate crisis, which has already left dozens of home builders in default, unable to pay off their debts.
Country Garden had managed to avoid a spiraling liquidity crisis until recently, when a slowdown in the Chinese economy prompted a sharp and sudden downturn in the company’s property sales. Presales of unfinished apartments, a crucial indicator of future revenue, plunged more than 50 percent in June and July, twice the rate of decline in the preceding five months.
There may not be a quick resolution to Country Garden’s financial predicament. China Evergrande, once considered a rival to Country Garden for the title of top Chinese home builder, defaulted on its debt in late 2021, and it continued to restructure its debt and negotiate with creditors for almost two years before it declared bankruptcy last month.
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