The US dollar debt that is about to mature cannot be repaid, and the Guangzhou real estate enterprise China Aoyuan directly came to a one-time "break": the official announced that all foreign debt was collectively defaulted.
According to the China Aoyuan announcement, the non-return is two debts totaling US$688 million due on January 20 and January 23, while the total outstanding principal amount of the foreign notes on the announcement date is about US$1.086 billion. In addition, China Aoyuan has at least HK$2.1 billion in three-year offshore syndicated loans pending, involving 12 offshore banks.
In the rare practice of directly announcing the overall default of China Aoyuan, many netizens said that "domineering side leakage" and "it is the uncle who really owes money", while some netizens who bought China Aoyuan off-plan houses are worried about whether they can close the building on time.
The China Fund News reporter noted that since the explosion of 6 billion yuan of internal financial management at the end of last year, China Aoyuan sales cliff, last December sales of only about 5.2 billion yuan, a year-on-year plunge of 73%. According to China Aoyuan, "the continued downturn in the market has undermined consumer confidence, making it difficult for the Group to change its existing goods and sell its assets on reasonable terms".
All foreign debts will not be repaid first
Netizen: Defaults are so bullish
On the evening of January 19, 2022, China Aoyuan announced that it would not pay the remaining principal and final interest on the US$188 million notes due on January 20, 2022 and US$500 million due on January 23, 2022, and that it would not pay the latest interest on the US$200 million notes due June 2023 and US$200 million due June 2024 after the expiration of the 30-day grace period.
As at the date of the announcement, the total outstanding principal amount of China Aoyuan Notes was approximately US$1,086 million. China Aoyuan also said that there will be (or has occurred) default events under all other of its overseas financial liabilities.
What is the total amount of foreign debt? China Aoyuan's announcement was not disclosed. However, judging from its 2021 interim report, it completed two rounds of three-year offshore syndicated loans totaling HK$2.1 billion during the reporting period, with a total of 12 overseas banks participating, and the three-year loan was obviously included in the default.
As of June 30, 2021, China Aoyuan included domestic and overseas debts, with total liabilities of approximately RMB262.864 billion.
Why is there a direct official declaration of collective default?
The rationale given by China Aoyuan was that "after careful consideration of liquidity conditions, and in order to retain limited cash resources and remain fair to all creditors in order to await the overall debt restructuring, China Aoyuan intends to adopt the same principle for other offshore financial debts".
This announcement of China Aoyuan has surprised many netizens. Judging from the message after the announcement, many netizens said that "domineering side leakage", "even the default is so bullish", "barefoot is not afraid to wear shoes", "Now the money is owed is the uncle!" The tone is full of passion and justice! There is no sense of guilt."
Sales fell off a cliff after the explosion
As early as September and October last year, China Aoyuan's stocks and bonds frequently appeared "double kills", subsidiaries bankruptcy, execution and other "gossip" continued, rating giants also repeatedly downgraded ratings. By the beginning of December, the company's internal financial management of about 6 billion yuan was announced, and a deferred payment plan was announced, including the use of housing to pay debts. Subsequently, the company's announcement reminded that overseas debts may be cross-defaulted until this one-time "break".
With the company's explosion, its sales have not unexpectedly fallen off a cliff.
As of the third quarter of 2021, China Aoyuan achieved unaudited property contract sales of approximately RMB98.5 billion, an increase of 18% over the same period in 2020. By the end of 2021, the contracted sales amount of its unaudited property was about RMB121.03 billion, down about 9% year-on-year.
That is to say, in the fourth quarter of last year, 10, 11 and 12 months, a total of 22.5 billion yuan was sold, specifically 10.13 billion yuan, 7.15 billion yuan and 5.2 billion yuan per month respectively. Among them, December has fallen to the freezing point, and in December 2020, China Aoyuan sold 19.25 billion yuan, which is to say that the year-on-year decline reached 73%.
China Aoyuan said that the continued downturn in the market has hit consumer confidence and made it difficult for the group to change its existing goods and sell assets on reasonable terms. At the same time, China Aoyuan also said that it would no longer take land, "the Group does not expect any major new land acquisitions in the foreseeable future, and the Group will continue to look for opportunities to release the value of existing urban renewal projects".
There were netizens who just bought a china aoyuan off-plan house on National Day last year, leaving a message, "Listening to people in their hometown, often stopping work", they began to worry about whether they could close the building on time.
At present, China Aoyuan is actively promoting the introduction of war investment and asset sales with a view to debt restructuring, but so far there has been no substantial progress. "The Group continues to maintain preliminary consultations with potential strategic investors and buyers, but has not entered into any legally binding agreement with any potential investors or buyers as at the date of this announcement," China Aoyuan said.
China Aoyuan's share price has been falling for a year and a half since July 2020, especially since June last year, from a high of HK$11.6 to the latest HK$1.58 on January 20, a drop of 86.4%. At present, the latest market value is less than HK$4.7 billion, or less than RMB4 billion, which is a huge contrast with the sales scale of more than 120 billion yuan.
This article originated from China Fund News