China Aoyuan wins Hong Kong court’s approval to proceed with restructuring more than US$4 billion of offshore debt, loans
- Approval from Hong Kong court came after similar sanctions granted by courts in Cayman Islands and British Virgin Islands in December
- Aoyuan had more than 242 billion yuan (US$33.8 billion) of total liabilities on June 30, including some 34.4 billion yuan worth of offshore bonds
The consent from the local court came on January 11, the developer said in a stock exchange filing on Friday. This came in addition to similar sanctions granted by courts in Cayman Islands and British Virgin Islands in December, given that some of its foreign-currency debts were sold by its units incorporated in those jurisdictions.
The sanction by the courts “is a major milestone towards the implementation of the holistic restructuring of the group’s material indebtedness,” chairman Guo Zi Wen said in the filing. The debt plan will protect the interests of all stakeholders and allow the firm to deliver its projects on schedule, he added.
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Aoyuan became the latest debt-laden Chinese home builder to win a reprieve from creditors in China’s property market shakeout, joining struggling peers like Sunac China and Kaisa Group in staving off liquidation. Chinese developers defaulted on more than US$100 billion of bonds since China’s “three red lines” policy in mid-2020 crippled weak borrowers while the ensuing Covid-19 pandemic plunged sales.
Guangzhou-based China Aoyuan officially defaulted on US$1.1 billion of notes in January 2022, triggering cross defaults in its borrowings. The group had 242 billion yuan (US$33.8 billion) of total liabilities on June 30, including the equivalent of about 73 billion yuan of bank borrowings and 34.4 billion yuan of bonds, according to its accounts.