Debt of Tianjin-based property developer Sunac China Holdings, which opens for subscription today, jumped 116.87 per cent to 5.79 billion yuan (HK$6.7 billion) last year while its gearing ratio shot up to 74 per cent from 28 per cent.
Chairman Sun Hongbin conceded that a healthy company's gearing ratio - the ratio between owner's equity to borrowed funds - ranges from 30 to 40 per cent.
Sun's wholly owned Sunco Group attempted a Hong Kong listing in 2004, but austerity measures on the mainland and dim market sentiment aborted the flotation, adversely affecting the group's cash flow.
Sun made an attempt to list Sunac China Holdings last year, but abandoned the plan because of the prevalent market sentiment.
'We have learned from our mistakes and are working very hard,' he said. Referring to the high debt level, he said: 'We'll take care of it after the listing.'
Asked how the firm planned to reduce its debt after the listing, chief executive Wang Mengde, however, was tight-lipped. 'Investors will see our performance when we announce the interim result next month,' was all he would say.