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China's Greenland Holdings discloses overdue debt in first half

[HONG KONG] Greenland Holdings, China's fourth-biggest developer by property sales, said it had overdue loans of 457.5 million yuan (S$93.537 million) in some units in the north-east province of Liaoning at the end of June, underscoring concerns about the company's debt problems.

Companies under Greenland's unit in Liaoning had overdue short-term debt of 247.5 million yuan, as well as 210 million yuan in long-term obligations, according to Greenland's interim report dated Aug 25.

The company told Bloomberg News last week its project in China's northeast faced repayment problems due to the region's weak real estate market.

China's property market has turned "significantly" from the second quarter due to the heightened crackdown on the real-estate sector, the Shanghai-based firm, 46.4 per cent owned by the municipal government, said in last week's report.

The nature of the joint-venture in some projects and management issues were among reasons for the overdue loans, an investor relations officer at Greenland said in response to Bloomberg queries Tuesday.

"The impact of overdue loans on Greenland is reputational risk," said Zhi Wei Feng, Singapore-based head of China corporate credit research at Standard Chartered.

"The company needs to improve transparency and communication with investors."

This isn't the first time a Greenland unit has had problems repaying debt. Last year, Greenland affiliate Shanghai Yunfeng Group was in default on two billion yuan of privately placed notes after the triggering of early repayment clauses, according to a Caixin magazine report.

Greenland's US$600 million 2024 bonds fell about one US cent on the US dollar to 101.4 US cents in the past 10 trading sessions, according to Bloomberg-compiled prices.

Its 8 billion yuan onshore 2020 bonds dropped two yuan to 94.7 yuan over the same period. The company's share price fell 0.9 per cent Tuesday to 7.61 yuan as of 3.14pm in Shanghai.

The banks involved in the overdue debt include Bank of Jinzhou, Bank of Yingkou, Shengjing Bank and Hengfeng Bank.

Greenland said the overdue loans in Liaoning will not trigger a cross-default clause on its US dollar bonds and is currently dealing with those loans with the aim of resolving the issue by the end of 2017.

"The overdue loans reflect the fact that Greenland's management of its units is a bit loose," according to a CICC Research note on Aug 25.

"Investors should pay attention to whether the event will exacerbate the liquidity conditions within Greenland."