Zhenro Properties seeks waivers from bondholders’ claims ahead of US$200 million note redemption day

Zhenro Properties is seeking bondholders’ approval to waive any claims against its failure to redeem a US$200 million note

The Shanghai-based developer has a clean repayment record. Still, a market downturn is drying up its short term cash, it says

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A residential and commercial complex under construction in Nanning in southern China’s Guangxi region on November 9, 2021. Photo: AFP

Published: 2:00pm, 19 Feb 2022

Zhenro Properties has asked holders of its US$200 million perpetual note to forgive any potential default that could arise from its failure to redeem the securities due in March, citing short-term funding issues amid a market downturn.

The Shanghai-based developer said the lack of capital market funding and bank loans to property developers since the second half of last year have caused liquidity pressure that could make it unable to redeem the notes due on March 5, according to a filing to the Hong Kong stock exchange.

Zhenro is therefore seeking shareholders’ consent, at a meeting slated for March 14 in Hong Kong, to waive any claims against it if does not redeem the notes next month.

“The company expects that its existing internal resources may be insufficient to address its upcoming debt maturities in March, including the redemption of the securities in full on 5 March,” it said in the stock exchange announcement.

Undated photograph of Zhenro Properties’ signage. Photo: Weibo

The disclosure Friday invalidated the January statement that said Zhenro was planning to redeem the outstanding perpetual note in full. That statement did not reassure investors for long. Just last week, speculations that the company would skip its redemption surfaced, sending the US$200 million perpetual bond, which pays 10.25 per cent coupon, down to 50 cents on the dollar at one point on Friday.

“The market condition in the real estate sector remains under pressure in 2022,” Zhenro said on Friday. “In the absence of a sharp recovery in the market and a resurge of various financing options, the company remains cautious about its liquidity in the near term.”