New World Development secures bank facilities covering HK$88.2 billion of existing unsecured offshore debt.

New World Development secures bank facilities covering HK$88.2 billion of existing unsecured offshore debt.

New World Development (NWD) has secured bank facilities covering HK$88.2 billion of its existing unsecured offshore debt, a significant milestone that brings the company closer to stabilizing its financial position. The refinancing agreement, one of the largest of its kind in Hong Kong, follows months of negotiations aimed at preventing the company from defaulting [1].

The agreement, which was reported by Bloomberg News, involves written commitments from all banks for a loan refinancing of HK$87.5 billion. This deal brings the company closer to finalizing a crucial lifeline just days before an impending deadline. The next procedural step involves lenders signing the loan documents, which is expected to be completed shortly [1].

If NWD fails to achieve 100% approval by 30th June, the refinancing deal could collapse, resulting in the release of any pledged collateral and cancellation of bank commitments [1]. The refinancing agreement will defer HK$63.4 billion in borrowings due this year and next, extending their maturities by three years. For HK$24.1 billion in loans due in 2027 and beyond, maturities will remain unchanged, but NWD will need to provide additional collateral and credit enhancements [1].

The company has included around 40 properties in the refinancing collateral pool, such as its headquarters, New World Tower, and a second-ranking mortgage on its waterfront complex, Victoria Dockside. The deal also includes a letter of comfort from Chow Tai Fook Enterprises Ltd. [1].

Once finalized, this agreement will offer NWD some short-term relief, but challenges remain. Attention is now focused on the company’s ability to raise an additional HK$15.6 billion secured by a first-ranking mortgage on Victoria Dockside, with part of the proceeds designated to repay the completed refinancing [1].

NWD faces significant bond interest payments, including HK$11.5 million for a 4% Hong Kong dollar note, followed by HK$36.7 million for a 4.89% bond and HK$24 million for a 4.79% security due Monday. These obligations pertain to regular bonds without options for deferred payments [1].

The refinancing marks the end of months-long negotiations for a debt package that would pull the company from the brink of default. Controlled by the family empire of Hong Kong tycoon Henry Cheng, NWD has faced significant challenges amid a prolonged property downturn in Hong Kong and mainland China [2].

References:
[1] https://www.dimsumdaily.hk/new-world-development-shares-rise-nearly-3-after-securing-hk87-5-billion-refinancing-deal/
[2] https://sg.finance.yahoo.com/news/world-gets-100-lender-approval-065846895.html