New World’s top shareholder seeks to refinance HK$7.3 billion loan

[HONG KONG] Chow Tai Fook Enterprises (CTFE), the main investment arm of Hong Kong billionaire Henry Cheng’s family, is looking to refinance a loan of around HK$7.3 billion (S$1.2 billion) that is due in June, according to people familiar with the matter, testing banks’ appetite for exposure to a firm tied to the clan’s troubled property business.

The company is in preliminary discussions with banks for a potential five-year facility, said the people, who asked not to be identified discussing private matters.

Last year, the firm had to repay a separate borrowing with its own cash amid a challenging funding environment at the time, the people said. While the sources declined to disclose the size of the loan, the company had one HK$7 billion facility that matured last July, according to Bloomberg-compiled data.

CTFE is the largest shareholder in New World Development, the cash-strapped developer that was pushed to the brink of default last year before securing a record HK$88.2 billion loan refinancing.

Because of its more than 40 per cent interest in New World, CTFE’s fundraising moves are closely watched as a barometer of banks’ confidence in Hong Kong’s battered property sector.

Increasing uncertainty over fundraising prospects has added urgency to the Chengs’ efforts to bolster CTFE’s balance sheet, spurring a series of portfolio moves in recent months.

In December, the family transferred a 54 per cent stake in Chow Tai Fook Jewellery Group to a unit of CTFE, according to Hong Kong stock exchange data.

The same month, CTFE agreed to sell Australian power producer Alinta Energy to Singapore’s Sembcorp Industries, in a deal expected to close in the first half of this year.

The sale, along with the share transfer, could lower CTFE’s net debt-to-net asset ratio to about 29 per cent from 62 per cent as of June 2025.

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Earlier this year, CTFE reassured banks that its financial position had been improving, with its net debt-to-Ebitda ratio falling to 3.7 times from 7.3 times, on top of higher revenue.

CTFE did not immediately respond to a request for comment.

Hong Kong’s property sector has shown signs of a rebound recently after years of weakness. Reflecting the shift in sentiment, Sun Hung Kai Properties, the city’s largest developer, is seeking a loan of at least HK$5 billion, returning to the market after skipping its annual refinancing last year.

CTFE’s refinancing push comes as talks have stalled between the Cheng family and Blackstone over a potential capital injection for New World. The talks hit a roadblock after the Chengs grew reluctant to cede control of their real estate flagship. BLOOMBERG