Hong Kong builder Parkview misses interest payment on loan

[HONG KONG] Hong Kong developer Parkview Group has missed an interest payment on a US$940 million loan backed by a landmark Beijing asset, according to people familiar with the matter, less than a year after it secured the refinancing deal.

Parkview failed to make a 50 million yuan (US$7.4 million) interest payment that was due in early June, said the people, who asked not to be identified discussing private matters.

The loan has multiple portions denominated in both yuan and dollars, they added. The company obtained the loan, backed by the Parkview Green complex in Beijing’s Chaoyang district, last December when it refinanced an identical-sized borrowing that underwent two brief extensions. While banks reserve the right to call a default on the loan, none has moved to do so yet, the people said.

Parkview’s latest debt challenges underscore the continued impact of China’s years-long property crisis on developers with projects in the territory.

The missed interest payment leaves Parkview struggling to find other funding options, while banks on the loan suddenly have to look for ways to ensure they will be able to recoup their money. 

Parkview had earlier tried to enlist the aid of a private lender to cover the interest payment, but the lender sought a structure that would give it repayment priority over other banks on the loan, two of the people said.

That proposal, which would require unanimous consent from all existing banks, was rejected by Taiwanese lender Bank of Panhsin, they added.  

Parkview didn’t respond to requests for comment.

Bank of Panhsin said in response to a Bloomberg query that the rejection is to safeguard the rights of the syndicate banks, and it hopes that the borrower will dispose of the real estate asset rather than extending the loan or introducing external funding with debt seniority over the syndicate banks.

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Parkview’s loan has a one-year tenor and carries an extension option of up to two years.

The refinancing deal came after months of negotiations, during which, Parkview even considered selling artwork valued at over HK$200 million (US$25.5 million) from Parkview Green’s collection in an effort to attract creditor support.  

Beyond Parkview Green, which is known for its glass architecture and collection of contemporary art, the company’s portfolio includes the Hong Kong Parkview residential complex and Parkview Square in Singapore, according to its website. BLOOMBERG