New World seeks more banks to join up to US$2 billion loan
Investors are increasingly sceptical of the firm’s ability to manage its debt burden
[HONG KONG] New World Development is looking for more banks to join an up to US$2 billion loan backed by its key asset, Victoria Dockside, according to people familiar with the matter, as the cash-strapped company tries to shore up its finances.
Deustche Bank, which is arranging the deal, sent invitations this week to some banks that aren’t already lenders to the developer, the people said, asking not to be identified discussing private matters. The base size of the three-year facility is HK$4 billion (S$657.8 million), they added. Proposed terms that the company sent to other banks in March didn’t specify a base loan size.
Some of New World’s existing lenders have since decided not to participate in the transaction because they are separately engaged in an HK$87.5 billion refinancing exercise by the company, the people said. The financiers are wary of increasing their exposure to the company, they added. Banks must finalise their commitments to the new loan by July 11, the people said.
New World, controlled by one of Hong Kong’s richest families, has been struggling with liquidity problems amid a years-long property slump in the city and mainland China. Investors have become increasingly skeptical of the firm’s ability to manage its debt burden, particularly after it reported its first loss in 20 years for the financial year ended last June.
New World didn’t immediately respond to a request for comment. A Deutsche Bank spokesperson declined to comment.
New World plans to use the proceeds from the new loan to repay debt. The company is using Victoria Dockside, one of the company’s most valuable properties, as a first-lien mortgage for this loan, and it will also be used as second-lien mortgage for its mega refinancing.
The developer is racing to finalise the refinancing deal by the end of June. It has landed commitments of more than HK$35 billion for the deal, about 40% of that total target amount. BLOOMBERG
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