Evergrande crisis: developer Modern Land (China) cancels US$250 million bond repayment plan on liquidity issues

Name: Unpaid by Evergrande, supplier sells car and home to rescue his business
Uploaded: 2021-10-21T01:43:05.000Z
Duration: 2 min 25 s
Description: Unpaid by Evergrande, supplier sells car and home to rescue his business

Modern Land had intended to repay a portion of its US$250 million bond due October 25, extend the deadline on the balance by three months

The decision puts further stress on the China property market amid concerns about default risks at Evergrande, other developers

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Zhang Peng, Modern Land’s president, in a file photo from a 2016 interview. Photo: Edmond So

Chad Bray

Published: 9:43am, 21 Oct 2021Updated: 10:51pm, 21 Oct 2021

China’s property market has taken another turn for the worse as developer Modern Land (China) has cancelled its plan to repay a portion of a US$250 million junk bond and extend it just days before it was set to mature, joining China Evergrande Group and other peers in a financial mess.

At the same time, Chinese Estates Holdings, once Evergrande’s second-biggest shareholder, said it sold its holdings in high-yield bonds issued by another Chinese developer Kaisa Group Holdings at a loss. The sales this week at prevailing market rates came just days after Kaisa said it made an interest payment due on its debt last week.

Late Wednesday, Beijing-based Modern Land scrapped a solicitation process related to a 12.85 per cent US$250 million bond due on October 25, citing liquidity issues and saying the exercise “would not be in the best interest of the company” and its stakeholders. It had earlier proposed to pay US$87.5 million of the principal and extend the payment deadline on the balance by three months.

The decision was made despite an earlier pledge by Modern Land’s chairman and its president to lend the company 800 million yuan (US$125.1 million) to ease its cash crunch. It came on the same day Evergrande acrimoniously terminated a deal to sell some of its assets to a rival in an attempt to raise US$2.6 billion of cash and avert a bond default.

02:25

Unpaid by Evergrande, supplier sells car and home to rescue his business

Modern Land is now planning to engage an independent financial adviser to assess its capital structure, liquidity profile, operating and financial condition “with a view to achieving a feasible solution to its current liquidity issues,” it said in an exchange filing late Wednesday.

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