NewMainland China developer Country Garden signs HK$4.5 billion club loan to cut borrowing costs

Mainland developer Country Garden has signed a HK$4.5 billion club loan with seven banks to reduce financing costs, the company said on Thursday.

Hang Seng Bank, HSBC, Shanghai Pudong Development Bank, JPMorgan Chase, Goldman Sachs, Bank of China and Deutsche Bank have agreed to offer the four-year loan facility, denominated in both Hong Kong and US dollars, at a per annum cost 3.7 percentage points more than Hibor/Libor, according to its emailed statement and filing with the Hong Kong stock exchange.

“The cost of the club loan is much lower than the company’s current weighted-average financing cost and will help reduce the company’s funding cost,” Country Garden said in the emailed statement.

Country Garden’s chief financial officer Wu Jianbin told the South China Morning Post in September that he planned to halve the firm’s funding costs in the next two years to between 4 per cent and 5 per cent from more than 8 per cent now.

That plan started in August with a HK$3.2 billion rights issue, of one new share for every 15 existing shares at HK$2.50 each. The company’s shares gained 1.36 per cent to HK$2.98 by 3.36pm on Thursday.

The club loan would be used to repay maturing debts and for general corporate purposes, the developer said.