Yahoo Finance Country Garden sells stake in Dalian Wanda's shopping mall manager for US$428 million to fix offshore debt default
Chinese developer Country Garden Holdings is selling a minority stake in Zhuhai Wanda Commercial Management Group, China's biggest shopping mall operator, to help repay mounting debt and ease a liquidity crunch.
Country Garden will sell its 1.79 per cent stake in Zhuhai Wanda back to the Dalian Wanda group, controlled by billionaire Wang Jianlin, for 3.07 billion yuan (US$428 million), according to a Hong Kong stock exchange filing on Thursday. The firm will receive the payment in three instalments by March 2024, it added.
The transaction adds to a string of asset sales after the Foshan, Guangdong-based developer slumped into a financial crisis. Once China's biggest home builder by sales, the firm skipped a US$15.4 million coupon payment on an offshore bond in October, roiling an already weak market.
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The firm surprisingly repaid a 800 million yuan bond on Wednesday before its 2024 maturity, averting what would have been its first onshore default.
Dalian Wanda Group's Qingpu shopping mall in Shanghai. Photo: Bloomberg alt=Dalian Wanda Group's Qingpu shopping mall in Shanghai. Photo: Bloomberg>
"The group is actively resolving the periodic liquidity pressure," Country Garden said in its filing. "The net proceeds from the sale will be used for the offshore restructuring."
Country Garden, through an offshore unit, paid 3.23 billion yuan for the 1.79 per cent stake in Zhuhai Wanda in July 2016. That purchase was part of a 38 billion yuan capital infusion by outside investors including private equity firm PAG, Ant Group, Tencent Holdings and Citic Securities, according to public documents.
The plan allowed the investors to exit via a stock listing in Hong Kong, or sell back their stakes to Dalian Wanda if the listing failed to happen by the end of 2023. Zhuhai Wanda, which manages 494 malls in mainland China, has lodged four attempts to list its shares in Hong Kong, most recently in June, without success.
Country Garden this week disclosed another round of pay cuts to trim costs. Four of its top executives, including chairman Yang Huiyan and her husband Chen Chong, voluntarily offered to cut their salaries for the third time since 2022, to focus on delivering pre-sold properties and prevent more defaults amid stagnating home sales.
Separately, PAG and Dalian Wanda announced earlier this week a plan to redeem the 2016 bets, ahead of the year-end deadline. The US$5.3 billion deal forced Wang, the 69-year billionaire founder, to cede control of Zhuhai Wanda, with outside investors wresting a collective 60 per cent stake.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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