Chinese property giant Country Garden will sell a stake in a commercial center operator for about $428 million, using the proceeds to help restructure offshore debt.
The indebted developer said Thursday that a group subsidiary will sell its entire 1.79% stake in Zhuhai Wanda Commercial Management Group for 3.07 billion yuan ($428.0 million).
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Country Garden Holding Ltd announced on Wednesday that it would make a CNY3.07 billion disposal to assist in its debt restructuring.
The Chinese property developer revealed its intention to sell 23.65 million shares and use the proceeds to pay down debt. The sale was approved at a temporary shareholders meeting and was also given approval from the Hong Kong Stock Exchange.
The company had borrowed significantly to purchase land and to finance construction projects before the coronavirus pandemic battered the industry. With no end in sight to the economic pressures, the company has begun to see the need for debt restructuring.
The disposal of its shares, which represents 5% of the company’s total share capital, is part of its efforts to reduce debt to a more manageable level. The move is believed to have attracted a number of investors, as shares in Country Garden have risen 5.9% since the announcement.
Country Garden is not the only real estate company to be suffering due to the coronavirus. Many have reported scaling back their development and construction plans and are under increased pressure from suppliers and other creditors.
The restructuring plan is expected to provide the developer with additional funding opportunities, along with potential cost savings. These savings could enable them to resume some of their project plans, in addition to providing the company with more financial flexibility.
The disposal of shares represents an important step to Country Garden’s debt restructuring. With the help of this additional funding, the company can better position itself to respond to the virus-induced economic downturn and better prepare itself for the future.
