China property

Chinese property firm Sunac denies media report on loan suspension, warns of legal action

Sunac says its business ties with Huarong remain unchanged and expresses anger over ‘false’ reporting in Bloomberg article

PUBLISHED : Wednesday, 20 September, 2017, 1:51pm
UPDATED : Wednesday, 20 September, 2017, 4:29pm

Sunac China Holdings, one of China’s largest property developers, denied a media report that China Huarong Asset Management was temporarily suspending new loans to the company amid tightening regulatory scrutiny, and warned it may take legal action.

Bloomberg had reported on Tuesday that Huarong’s risk department had ordered a suspension of any new loans to Sunac that had not already been signed, effective September 18, citing an internal email its reporters had seen.

The email called for heightened risk monitoring and attention to existing loans to Sunac, citing the developer’s high gearing and debt as well as the regulator’s increased focus on its rapid expansion, the Bloomberg report said.

“We have verified the matter with Huarong and they said they had never received any regulatory requirements concerning, or notices against, Sunac,” Sunac China said in a statement on Wednesday. “This is a unilateral misreading by the reporters.”

“Huarong has not stopped its business cooperation with Sunac. It will keep working with Sunac on the premise of controllable risks,” the Sunac statement said.

“The false report by Bloomberg has created a negative impact on our company’s reputation. We reserve the right to pursue legal action against it for publishing false reports about us,” the statement said.

In its own statement, Huarong said that the Bloomberg report contained some “misunderstood information”.

“So far, Huarong has not been notified of any regulatory requirements from the China Banking Regulatory Commission concerning, or notices against, Sunac,” Huarong’s statement said.

“This is a unilateral misreading by the reporters.”

“Huarong’s attention to Sunac is a routine process in client management. We did not stop business cooperation with Sunac, and we will keep working with Sunac on the premise of controllable risks, ” it said.

A Bloomberg spokesman said the company “stands by its reporting”. It has updated the story to incorporate Sunac’s statement, the spokesman said.

Shares of Sunac went on a roller-coaster ride on Wednesday, briefly sinking 6.4 per cent to a low of HK$35.2 in the morning, before reversing course to rise as much as 1.3 per cent.

By market close, Sunac had resumed its decline, falling 2.8 per cent to HK$36.55.

Sunac was the only losing stock among the top 10 most heavily traded stocks in Hong Kong. About 53 million shares have changed hands, with a total turnover of HK$1.9 billion.

Huarong is China’s biggest state-owned bad debt management firm by assets.

China has stepped up regulatory scrutiny of leveraged investments due to mounting debt risks and persistent capital outflow pressure, and has focused particularly on overseas mergers and acquisitions by Chinese companies.

Media reports have said some of the country’s biggest conglomerates have been investigated, including Dalian Wanda, Hainan Airline Group, Anbang Insurance, and Fosun Group.