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By Xie Yu
HONG KONG (Reuters) -Chinese developer Country Garden said on Wednesday a liquidation petition has been filed against it for non-payment of a $205 million loan, clouding its debt revamp prospects and undermining Beijing's effort to restore confidence in the property sector.
Country Garden said in a regulatory filing it would "resolutely" oppose the petition, which was filed by a creditor, Ever Credit Limited, a unit of Hong Kong-listed Kingboard Holdings, opens new tab.
The petition is set to revive homebuyer and creditor concerns about the Chinese property sector's debt crisis at a time when Beijing is trying to boost confidence in the industry that accounts for a quarter of China's GDP.
WHAT DO WE KNOW ABOUT COUNTRY GARDEN?
Until 2023, Country Garden was the largest Chinese developer by sales. The company was considered financially sound compared with peers like China Evergrande Group, which defaulted on its debt in 2021.
While Country Garden's liabilities are only 59% of those at Evergrande, it has 3,103 projects across China, compared with around 800 for Evergrande - making the company matter to systemic stability while also fueling contagion fears as it shows signs of financial stress.
A liquidation of Country Garden would exacerbate the real estate crisis, put more strain on its onshore lenders, and could delay the prospect of a recovery of not only the property market, but the overall Chinese economy.
WHERE ARE WE IN COUNTRY GARDEN'S DEBT CRISIS? Country Garden in October missed a $15 million bond coupon repayment and a group of so-called ad hoc bondholders was formed for negotiations to prepare a roadmap for repayment of its $11 billion offshore debt that is deemed in default.
The developer last month said that it had appointed KPMG Advisory (China) Ltd as its principal financial adviser for its offshore debt restructuring, replacing Houlihan Lokey which it picked last year.
HOW BAD IS COUNTRY GARDEN'S FINANCIAL SITUATION?
Country Garden's total liabilities were about $194 billion at the end of June last year, unchanged from the end of 2022.
It faces 108.7 billion yuan ($14.9 billion) worth of debts due within 12 months, while its cash levels are around 101.1 billion yuan.
The company's liquidity stresses became public last August after it missed two dollar coupon payments.
Country Garden Chairperson Yang Huiyan said last month the market did not recover as expected in 2023 and was still in correction.
WILL BEIJING BAIL COUNTRY GARDEN OUT AND WHAT IS THE OUTLOOK FOR THE DEVELOPER?