Caixin
Dec 23, 2020 08:54 PM
FINANCE

Subsidiaries of Property Developer Tahoe Win Reprieve to Repay Mounting Debt

In a filing published in September, Tahoe said it was communicating with creditors and planning a debt restructuring.
In a filing published in September, Tahoe said it was communicating with creditors and planning a debt restructuring.

Two subsidiaries of Chinese property developer Tahoe Group Co. Ltd. have been granted a more than 3-1/2 year extension to pay back 12 billion yuan ($1.8 billion) of debt, as the parent company struggles with a mounting debt crisis.

The creditor, the Shenzhen unit of state-owned China Great Wall Asset Management Co. Ltd., has agreed to extend the repayment deadline from April this year to December 2023, according to a Tuesday stock exchange filing (link in Chinese). As part of the extension agreement, Tahoe pledged to guarantee the liabilities of the subsidiaries, Shenzhen Tahoe Property Development and Shenzhen Zhongweijingshan Property Development, for no more than 16 billion yuan, it said in the filing to the Shenzhen bourse.

Tahoe, a Fujian province-based privately owned real estate company, has been caught in a crisis of mounting financial losses and debt. The company had already defaulted on six bonds and missed repayments amounting to 48.7 billion yuan in debt and 6.5 billion yuan of interest as of Oct. 24, as its business faced headwinds amid the fallout of the Covid-19 pandemic and tightened oversight on the property industry, according to its third-quarter report (link in Chinese).

The Shenzhen-listed company reported a net loss attributable to shareholders of 391.2 million yuan in the third quarter, down sharply from a net profit of 560.2 million yuan (link in Chinese) over the same period last year.

The two Tahoe subsidiaries have racked up debt as their net asset value was in negative territory at the end of September, with net losses for Shenzhen Tahoe amounting to 25.3 million yuan and 36 million yuan for Shenzhen Zhongweijingshan in the first three quarters of the year.

In a filing (link in Chinese) published in September, Tahoe said it was communicating with creditors and planning a debt restructuring. Tahoe was originally scheduled to submit a debt restructuring plan before the end of September, but then postponed the deadline to the end of this year, sources familiar with the issue have told Caixin.

Pursuant of this goal, the company’s controlling shareholder, Tahoe Investment Group Co. Ltd., reached an agreement with strategic investor Hainan Wanyi Management Services, a subsidiary of top property developer China Vanke Co. Ltd. The deal will involve transferring 19.9% of Tahoe equities it holds to the China Vanke unit, according to a July filing (link in Chinese).

Over the past few weeks, another three creditors — China Minsheng Banking Corp. Ltd., China Bohai Bank Co. Ltd. and Xiamen International Trust Co. Ltd. — have also allowed Tahoe-linked companies to delay debt repayments.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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