Country Garden: A Step Closer to Debt Restructuring Agreement

Country Garden Holdings Company Limited, one of China's largest property developers, is nearing a crucial milestone in its ongoing debt restructuring efforts. According to a lawyer representing the company, Country Garden expects to reach terms with its creditors by February, potentially averting a liquidation petition filed against it in Hong Kong. This development comes as the company continues to grapple with the challenges of a prolonged sector-wide slump and a mountain of debt.



Country Garden's financial woes began to surface in late 2023 when it defaulted on $11 billion in offshore bonds. The company has since been fighting a liquidation petition in Hong Kong, with the next court hearing scheduled for January 20, 2025. In an effort to avoid liquidation, Country Garden has been actively engaged in negotiations with its creditors to restructure its offshore debt.

The proposed restructuring plan, submitted to some creditors late last month, includes a revised cash flow projection that shows a weaker outlook for the coming years compared to previous estimates. This revision indicates that the company is expecting financial challenges in the near future, which could make it difficult for Country Garden to meet its debt obligations and maintain liquidity.



Country Garden's revised cash flow projection is a standard part of a debt restructuring process, intended to demonstrate the company's ability to repay its debts. However, the details of the cash flow projection have not been disclosed, and it is unclear how the company plans to address its financial challenges in the coming years.

The success of Country Garden's restructuring plan depends on gaining support from its key creditors. If the company can secure the backing of its major creditors for the restructuring proposal before the January 20, 2025 court hearing, it would pave the way for the company to seek more time from the court to implement a restructuring plan. This would allow Country Garden to avoid liquidation and focus on addressing its operational challenges and improving its financial performance in the long term.

However, Country Garden faces several challenges and risks associated with its proposed restructuring plan. One key challenge is the company's weak cash flow outlook, which could make it difficult for Country Garden to meet its debt obligations and maintain liquidity. Additionally, the company must navigate the complex and often contentious process of negotiating with its creditors to reach a mutually acceptable agreement.



To mitigate these risks, Country Garden should focus on improving its cash flow, engaging with its creditors in open and transparent communication, and exploring alternative financing options. By addressing these challenges proactively, Country Garden can increase the likelihood of a successful restructuring and avoid liquidation.

In conclusion, Country Garden Holdings Company Limited is nearing a crucial milestone in its ongoing debt restructuring efforts. The company expects to reach terms with its creditors by February, potentially averting a liquidation petition filed against it in Hong Kong. However, Country Garden faces several challenges and risks associated with its proposed restructuring plan, and must navigate the complex and often contentious process of negotiating with its creditors to reach a mutually acceptable agreement. By addressing these challenges proactively, Country Garden can increase the likelihood of a successful restructuring and avoid liquidation.