Logan, KWG gauge investor interest for Corniche loan refinancing
The existing facility carries an initial annualised yield of up to 13%, with a 30-month term and two optional six-month extensions
[HONG KONG] Distressed Chinese developers Logan Group and KWG Group Holdings have been sounding out investor interest in a potential plan to refinance a US$1.1 billion private loan secured by a luxury residential project in Hong Kong, according to sources familiar with the matter.
The firms are seeking to lower borrowing costs with the new potential deal, the sources said, asking not to be identified discussing private matters. The existing facility, backed by the upscale Corniche project and signed in August 2024, carries an initial annualised yield of up to 13 per cent, with a 30-month term and two optional six-month extensions.
It is unclear if any investors are interested in such a deal, the sources said.
The 2024 facility, arranged by JPMorgan Chase and provided by a consortium including Davidson Kempner Capital Management and Pacific Investment Management, helped the developers avert a default on a bank loan. It also cleared a path for Logan to restructure its US$8 billion in offshore debt.
Although the Corniche was not included in Logan’s debt restructuring, it had been at the centre of negotiations, as the ability to refinance the asset had been seen as a bellwether for the viability of the company’s broader restructuring plan.
Logan and KWG did not immediately respond to requests for comment.
Logan and KWG borrowed from 16 commercial banks in 2021 to fund the development of the luxury complex, betting on an influx of wealthy Chinese buyers. However, the project’s location, adjacent to a sewage treatment facility and a driving school in a middle-class neighbourhood, proved to be a difficult sell.
Some 78 out of 295 units at the Corniche have been sold so far, according to the project’s register of transactions. Sales picked up after the developers slashed prices by almost half. The latest transaction completed this month was a 1,697-square foot unit, which sold at HK$49.1 million (S$8 million), or about HK$28,933 per square foot. BLOOMBERG
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