Another real estate company thunderstorm! Agile's overseas debts were lost, and two years after vacating, it still defaulted

Perspectives New Media

2024-05-14 17:03Posted on the official account of Guangdong Guandian Real Estate New Media

Since May 9, the real estate sector of Hong Kong stocks has been improving, and many real estate stocks have ushered in a sharp rise, among which Shimao Group has risen far ahead, and Sunac China and CIFI Holdings have followed suit.

However, under the upward trend of the broader market, Agile ushered in a straight decline due to debt default.

On the morning of May 14, Agile released inside information that in view of the liquidity pressure faced by the company, the relevant interest on the 2020 notes has not been paid, and the grace period for the interest payment of the notes expires on May 13, 2024, and it is expected to be unable to meet all payment obligations under the offshore debt.

As soon as the news came out, the company's stock price fell directly by 12.86%, with the highest decline of more than 17%.

Agile Group said that the company will maintain active communication with creditors and will actively explore the best solution to achieve long-term sustainable development. At the same time, the company will also continue to take measures to accelerate the pre-sale of properties and accelerate the collection of sales proceeds to maximize efforts to improve the balance sheet position.

Although the market's reaction to Agile's default was surprised, it was not too surprised.

Default reality

Rumors about Agile's default have been spreading in the market as early as 2022.

In 2022, Agile deferred the payment of interest on two perpetual bonds and processed them. At that time, the industry commented that because of the exterrable nature of perpetual bonds, Agile was not considered to be in default.

However, at that time, the industry began to worry about Agile's solvency.

In December of the same year, Moody's downgraded Agile's corporate family rating to "Caa1" from "B3" and its senior unsecured rating to "Caa2" from "Caa1". At the time, Moody's noted that Agile Group's liquidity was expected to remain insufficient over the next 12 to 18 months in the absence of new external financing channels or asset disposals to address large maturing debt.

In March 2023, Agile had another default extension of a trust project.

The Shaoxing Keqiao Trust project involved in this case is an equity investment project, which is jointly developed by Agile and Xiangsheng Group. The total land price of the project was 2.04 billion yuan, and only the first payment of 1.02 billion yuan was made.

In response to this incident, Agile Group said that this is an equity cooperation project, not a debt, so the default has little to do with the group. The land refund is used to return the trust products, but the progress of the land refund is slow and has not yet arrived.

In this regard, some industry insiders believe that Agile is essentially in breach of contract. However, as Agile Group said, this is not a debt default in the real sense after all, so the market still retains Agile's "zero default" evaluation.

Today, the group's record of compliance is broken.

On May 14, 2024, Agile announced that it has not paid the relevant interest on the 2020 notes in view of the liquidity pressure faced by the company, and is expected to be unable to meet all payment obligations under its offshore debt.

According to Guandian New Media, the defaulted 2020 notes of Agile were issued by the company on October 8 and November 10, 2020, with a total amount of US$483 million and a coupon rate of 6.05%, which will mature in 2025.

Unlike the last equity cooperation, this time it was a real debt default. The interest payment date for the 2024 note was originally April 15, but the interest was not paid until the grace period expired on May 13. At this point, Agile Group officially declared a debt default.

After two years of hard work, Agile still couldn't stand it after all.

According to incomplete statistics, including the defaulted 2020 senior notes, Agile currently has a total of 9 offshore bonds in existence, with a total scale of about US$3.957 billion, including 4 perpetual bonds, 1 convertible bond, and 4 US dollar senior notes, with maturities between January 2025 and November 2026.

In terms of domestic bonds, there are three bonds totaling 2.15 billion yuan and one ABS of 4.244 billion yuan.

According to a report by Moody's, by March 2025, Agile may have a total of 9 billion yuan of equivalent bonds due or available for sale.

According to the company's annual report, Agile had cash and bank deposits of 12.553 billion yuan by the end of 2023, including restricted cash of 3.916 billion yuan.

The company's debt repayment pressure remains high in the coming year.

Debt repayment history

In the eyes of the market, Agile is an "eye-catching" private real estate company, and many real estate companies with better performance than it have been thundered, and it can maintain a record of "zero default" for many years.

In recent years, Agile has been "looking for money" everywhere, and after the introduction of the "three arrows", it has raised a lot of funds to repay debts through equity placement, asset disposal, bond issuance and other methods.

In terms of equity placement, Agile completed the allotment financing in November 2022, December 2022, January 2023 and August 2023 respectively, and obtained funds of HK$783 million, HK$617.2 million, HK$489 million and HK$387.2 million respectively. Without exception, these funds are used to pay off the company's existing debts.

In terms of asset disposal, Agile sold a residential project in Kuala Lumpur, Malaysia, for RM310 million in November last year. The company expects to record a loss of RM371 million in this transaction, which is expected to widen to RM431 million.

It would rather sell the project at a loss than to recover the blood, which also reflects the company's debt repayment pressure. In addition to the Kuala Lumpur project,

Agile has also put projects and properties in Maoming, Yunfu, Changsha, Wuhan, Changzhou and other places on the shelves.

At the same time, thanks to the past zero default record, Agile can also operate in the financing market.

In 2023, on the domestic side, Agile issued 1.2 billion medium-term notes in January and 700 million yuan in corporate bonds in March. Overseas, the Company was granted term loan facilities from financial institutions in March and May respectively, with a total of over HK$8.2 billion equivalent in syndicated loans.

In addition, since the introduction of the "white list" policy this year, Agile's projects in Chongqing, Guangzhou, Kunming and other places have been included in the list.

At the shareholders' meeting held in May 2023, Chen Zhuolin, chairman of Agile, mentioned that he hopes the group can turn losses into profits in 2024 or 2025 at the earliest.

However, what I didn't expect was that just when everyone thought that Agile could continue to hold on, they suddenly heard a thunderclap, and there seemed to be no sign of turning a profit.

In the first quarter of this year, Guangzhou Panyu Agile Real Estate Development Co., Ltd., the domestic entity of Agile, achieved an operating income of 3.906 billion yuan, an operating profit of 360 million yuan, a net loss of 572 million yuan, and a net loss attributable to the parent of 303 million yuan.

In addition, the pre-sale amount of Agile in the first four months was about 6.55 billion yuan, a year-on-year decrease of 68.02%; The corresponding construction area was 465,000 square meters, a year-on-year decrease of 65.93%.

Earlier, on May 6, Dima Shares, the listed entity of Dongyuan Real Estate, announced that it had defaulted on its bonds, and the corporate bond "21 Dima 01" failed to repay the principal and interest in full on the maturity date of April 30.

In this regard, some industry insiders pointed out that the thunderstorm of the two real estate companies in the month was not only because of the business problems of the enterprises themselves, but also because of the common problems in the industry.

The person believes that the bailout policies introduced in the past have not played a great role in stimulating the market, especially in non-first-tier and strong second-tier cities. These cities tend to have a large amount of inventory, and will face higher destocking pressure when the transaction volume cannot rise.

If the number of projects deployed by real estate companies in these cities with high destocking pressure is relatively large, the company's sales collection will be dragged down, and thunderstorms are inevitable.

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