No end in sight to Modern Land’s woes while shares sink to record low as trading resumes after 81-day suspension
- Stock plummets 40 per cent to HK$0.23, from its previous close of HK$0.45 on October 21
- Modern Land also said that it has received notices from some bondholders seeking early repayment of their debt
Shares of Chinese developer Modern Land (China) fell to an all-time low in Hong Kong following the resumption of trading after an 81-day suspension.
The shares sank 40 per cent to HK$0.23 on Monday, from its previous close of HK$0.45 on October 21, when it failed to repay the principal and interest upon maturity.
Modern Land said that it has appointed financial advisers to assist with its assessment of the company’s liquidity situation and “formulate an overall plan for feasible remediation actions taking into account the interests of onshore and offshore stakeholders”.
The embattled homebuilder has US$1.348 billion of outstanding dollar bonds, including US$200 million due on February 26 and US$300 million in November. Trading in the company’s debt securities, however, remain suspended until further notice.
Modern Land is among several Chinese developers struggling to stay afloat, coming under scrutiny from Beijing over its piling debt as well as a plunging property market. Over the past year, it has tried to offload assets to raise money and repay creditors, but has not been able to do much.
The latest setback came last week when Sunac China, the country’s fourth largest developer by sales, said it was dropping plans to acquire Modern Land’s listed services unit.
“The liquidity problems with Modern Land will directly result in material uncertainty regarding the realisability and sustainability of First Service Holding’s business obtained from Modern Land as well as the collectability of its receivables from Modern Land,” Sunac said in a statement to Hong Kong stock exchange on January 3.
On Friday, a Shanghai construction materials supplier with links to Shimao Group said it had defaulted on a 645 million yuan (US$101 million) project loan guaranteed by the Hong Kong-listed company.
03:02
Chinese real estate giants Evergrande and Kaisa continue unloading assets to cover debt
S&P Global Ratings said in a research note on Monday that mortgage easing in China was stabilising the housing market to a certain extent, but sales were unlikely to rebound to the pre-tightening level seen in the second half of 2020.
“We forecast a 10 per cent drop in residential sales in 2022, with more of the pain felt in the first half due to high base impact and weak buyer sentiment,” it added.
