New World gets 100% backing from banks for US$11 billion refinancing of loans, sources say

The deal is all but done, with only procedural steps left for lenders to sign the loan documents, which should happen shortly, according to the people. It brings relief just as investors had been closely watching debt deadlines including interest totalling US$9.2 million due on Friday and Monday on three local-currency bonds.

New World’s refinancing – which would be one of the largest of its kind ever in Hong Kong – marks the end of months-long negotiations for a debt package that would pull it from the brink of default. It buys time even as a prolonged property downturn in China continues to weigh on the builder, whose 11 Skies mall project opening in phases next to Hong Kong’s airport is one of the first things many visitors to the city see.

The deal comes with little time to spare. Documentation shows that if New World did not achieve a 100 per cent approval by June 30, the refinancing could fall through as any collateral pledged would be released and bank commitments cancelled.

Controlled by the family empire of Hong Kong tycoon Henry Cheng, New World has faced significant challenges amid the real estate slump in Hong Kong and mainland China, following years of aggressive debt-driven growth. Investors have grown increasingly concerned about the firm’s ability to manage its debt, particularly after it decided to delay interest payments on four perpetual notes, triggering a bond sell-off.

The refinancing agreement would push back HK$63.4 billion of borrowings that were set to come due this year and next, extending the maturities for three years, Bloomberg reported earlier. For HK$24.1 billion in loans due in 2027 and beyond, the maturities would remain the same, but New World will have to add some credit enhancements and put up additional collateral.