Country Garden reaches milestone as debt plan heads to vote

[HONG KONG] Country Garden Holdings, one of the biggest casualties of China’s real estate crisis, is wrapping up its US$14.1 billion offshore debt restructuring after more than two years, with creditors likely to approve its plan in a vote on Wednesday (Nov 5).

The vote represents a milestone for the developer after years of negotiations as it sought to avoid the fate of its peer China Evergrande Group, which was ordered to liquidate in 2024. It’s also a sign of some stability amid a years-long property slump that has triggered US$130 billion of defaults.

Under the debt proposal, Country Garden, once China’s biggest home seller by sales, aims to reduce its debt by as much as US$11.6 billion, offering creditors with cash payments, convertible bonds and new notes with a maturity as long as 11.5 years.

The debt plan could cut Country Garden’s total debt by over 20 per cent if at least US$7.5 billion of offshore debt is converted into mandatory convertible bonds, Bloomberg Intelligence analysts Daniel Fan and Hui Yen Tay wrote in a Tuesday note.

The plan is the culmination of negotiations since Country Garden defaulted in 2023 that at times neared collapse. The initial framework failed to win over bondholders, while bank lenders in May said that the proposal would not succeed if the company did not meet their demands. Along the way, Country Garden twice changed its financial advisers.

The vote comes as creditors are growing weary of lengthy debt talks and are increasingly accepting restructuring terms on offer, or in other cases, pushing for speedy liquidations. Eight of China’s 10 most indebted developers have largely, if not entirely, put the offshore restructuring process behind them.

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Even with its offshore restructuring mostly done, Country Garden still faces challenges. China’s new-home sales extended a slump in October, despite recent easing measures introduced by major cities to revive the struggling property market. Country Garden’s contracted sales fell 33 per cent in October from a year earlier.

Meanwhile, the company had 985 billion yuan (S$181 billion) in total liabilities as at Dec 31, 2024, according to its annual report. BLOOMBERG