Country Garden Services (CGS) has sold a 1.49% stake in Zhuhai Wanda, China's largest mall operator, for 3.14 billion yuan (approximately US$447 million) on September 25, 2024. This stake, consisting of about 108 million shares, will be acquired by Dalian Wanda and Zhuhai Wanying. Previously, CGS sold a 1.79% stake in December 2023 for 3.07 billion yuan. Following this latest sale, CGS retains 22.11 million shares, which is about 0.31% of Zhuhai Wanda. The proceeds from this transaction will be allocated for general working capital, and CGS's net asset value is expected to increase by nearly 461.1 million yuan. [8316906d]
This divestment comes as Country Garden faces significant financial challenges, with its shares currently suspended due to the failure to file 2023 earnings. As of June 30, 2023, the company reported liabilities totaling 1.36 trillion yuan. Furthermore, total contracted sales have plummeted by 78%, amounting to only 32.8 billion yuan in the first eight months of 2024. The company is under increasing pressure to reorganize its liabilities after defaulting on a dollar-denominated bond in October 2023. [8316906d]
In a broader context, Country Garden's struggles are indicative of the ongoing turmoil in the Chinese real estate sector, where several developers, including Yuzhou Group Holdings, are seeking debt restructuring solutions. Yuzhou filed for Chapter 15 bankruptcy in New York on August 25, 2024, as it aims to gain court recognition for its offshore debt restructuring efforts after failing to pay US$2.9 billion in dollar notes. The company is currently undergoing restructuring processes in Hong Kong and the Cayman Islands, with a creditor vote on its debt overhaul plan scheduled for September 12, 2024. [e119efc2]
As Country Garden and Yuzhou navigate their financial difficulties, the interconnected nature of their challenges highlights the precarious state of the Chinese property market, where many developers are struggling under the weight of substantial debt and regulatory pressures. [6b1fb5dd]