Mainland property developer Dalian Rightway Real Estate is in preliminary restructuring talks with lenders after missing a repayment on a US$447 million loan, three people involved in the situation said. The lenders have appointed accountancy firm PricewaterhouseCoopers to review the privately held developer's finances. Rightway, which builds homes mostly in Dalian and Beijing, has fallen victim to the central government's efforts to deflate the property bubble and curb bank lending and has been unable to turn to the Hong Kong stock market for funds because of declining investor interest in the mainland. Rightway borrowed US$690 million from lenders including Goldman Sachs, China Construction Bank and US private equity giant Avenue Capital Group in 2007. It has US$447 million left to repay. The company was scheduled to pay about US$90 million of that back to lenders on June 30 but came up with only about US$40 million. 'The appointment of PwC was because creditors want to establish how healthy the company's finances are,' a person involved in the situation said. 'The missed payment was very worrying.' A Rightway spokesman could not be contacted. Rightway's loan was a so-called 'pre-IPO' facility, meaning the developer was expected to pay the money back through a Hong Kong stock market flotation. The builder missed an opportunity to sell shares in 2009-10, when the central government was pumping cash into infrastructure projects to stimulate the economy and investors were keen on the real estate sector. Rightway's chairman, Fu Yanbin is believed to be upbeat about pulling off a share issue this year. The Hang Seng Index has lost 16 per cent in the past six months. International investors are pulling money out of the mainland because of worries over inflation, possibly unsustainable levels of local government and infrastructure debt and the declining health of the real estate sector. After home prices in most major cities soared last year, the government restricted mortgage lending and multiple home purchases and slapped a punitive tax on quick-flip property deals. At least 35 large cities have banned residents from buying more than two flats this year. Developers are also finding it difficult to get new financing from banks, which the government has forced to curb lending to drain cash out of the economy after inflation soared to a three-year high of 6.5 per cent in July. Most mainland developers are loaded up with debt and face not being able to make repayments if sales slow and they cannot refinance their loans. 'Sales are dropping across the nation,' said Dickson Wong Hung, the chief executive for northern and southwestern China at property agency Centaline. The firm concluded 500 transactions in the secondary residential market last month, compared with an average of 1,000 a month in 2009.