Chinese developer R&F says lack of funds to settle bond tender offer


The logo of Guangzhou-based real estate developer R&F Properties is pictured at a strategic cooperation signing ceremony in Beijing, China on July 19, 2017. REUTERS / Jason Lee

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HONG KONG, Jan.6 (Reuters) – Chinese developer Guangzhou R&F Properties (2777.HK) said it did not have sufficient funds to repurchase a $ 725 million bond as the sale of its assets failed to took place as planned.

He said in a filing on Wednesday that the funds available to settle his takeover bid on the offshore bond were significantly lower than the $ 300 million he had previously expected, due to continued volatility in the real estate industry.

R&F sought the consent of 5.75% bondholders last month to extend the January 13 bond maturity by six months, as part of efforts to “improve its overall financial position.” Read more

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The developer also offered two options as part of a takeover bid: buy back the tickets at a 17% discount, or $ 830 for every $ 1,000 in principal; or by redeeming at most half of the warrants in full, both with accrued interest.

Chinese real estate developers have struggled to weather tight liquidity conditions in recent months due to the government’s crackdown on excessive borrowing and speculation in the sector.

R&F said on the record that 71.7% of bondholders bid for the first option, while 24.2% for the second – but it expects to have “materially” of $ 300 million. to redeem all the bonds.

“The proceeds from certain asset sales contemplated by the group may not materialize on the settlement date,” he said, adding that the settlement date had been postponed two days to around January 12.

In last month’s document, the company said it would accept offers for tickets on a pro-rata basis, and any tickets not accepted for purchase would be returned to bondholders. And holders who deposited would be deemed to have approved the extension of the deadline.

“Despite delays in the progress of some early asset sales, the group continues to take active measures to consolidate its liquidity position until the settlement date,” R&F added in Wednesday’s filing.

The developer’s total borrowings at the end of June stood at 143.4 billion yuan ($ 22.50 billion), according to its half-yearly financial report.

The bond in question fell to 61.5 cents to the dollar in the afternoon in Asia on Thursday, from 66.5 overnight, while an R&F yuan bond due April 2022 plunged 10%. .

Hong Kong-listed R&F shares were up 1% at 06:00 GMT, compared to a 0.4% drop in the broad market (.HSI).

($ 1 = 6.3736 Chinese yuan)

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Reporting by Clare Jim; Editing by Jacqueline Wong

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