Country Garden, China’s top property developer, plans US$360 million share sale to refinance debt
- The Shenzhen-based company will issue 870 million new shares at HK$3.25 each, a 12.6 per cent discount to its last closing price
- The company’s shares declined as much as 15.9 per cent to HK$3.13 in intraday trading
Country Garden Holdings, China’s largest property developer by sales, said it aims to raise HK$2.83 billion (US$360.2 million) from a share sale to refinance offshore debt and for working capital needs. The shares slumped on the announcement.
The Shenzhen-based company will issue 870 million new shares, or 3.62 per cent of the enlarged share capital, at HK$3.25 each, representing a 12.6 per cent discount to the closing price on Tuesday, it said in an exchange filing on Wednesday. UBS is the placing agent.
The fundraising “can support the company to optimise its debt, capital structure and increase its equity ratio at a time when the industry is facing challenges”, Country Garden said in a separate statement to the Post.
Beijing’s “three red lines” policy, introduced in August 2020 to curb excessive debt in the real estate industry, has shut access to funding for the mainland’s weakest borrowers. Country Garden is currently tagged yellow under the leveraging metrics, the second-most constrained type of borrower.
The developer had total debts of 318 billion yuan (US$47.3 billion) at the end of last year, versus 326.5 billion yuan a year earlier.
The company’s shares declined as much as 16 per cent to HK$3.12 in intraday trading.