Caixin
Jun 16, 2021 08:02 AM
FINANCE

Indebted China Oceanwide’s Shares in Listed Arm Auctioned by Court

A banner of China's Oceanwide is displayed at the construction site of the property
A banner of China's Oceanwide is displayed at the construction site of the property

Chinese real estate developer Oceanwide Holdings Co. Ltd. (000046.SZ) faces major shareholding changes after part of its equity was put up for judicial sale by its indebted controlling shareholder.

A total of 294 million of Oceanwide Holdings’ shares were auctioned between Monday and Tuesday, records from a judicial auction platform run by Alibaba Group showed. The equity, originally held by biggest shareholder China Oceanwide Holdings Group Co. Ltd. (China Oceanwide), accounted for 3.39% of Oceanwide Holdings.

An individual identified as Fang Zebin paid 262 million yuan ($41 million) for 117.6 million shares. After the acquisition, Fang became the second-largest shareholder of Oceanwide Holdings with 226 million shares. Another individual, Zhang Yu, bought 58.8 million shares for 136 million yuan, auction records showed. The rest of the shares failed to be sold.

Caixin learned that the shares were pledged by China Oceanwide for loans it failed to repay. Backed by property tycoon Lu Zhiqiang, China Oceanwide was among several Chinese overseas dealmakers that fell afoul of regulators’ tightening scrutiny of domestic companies’ debt-fueled expansion.

The liquidity crisis of China Oceanwide and its affiliates came into focus since the spring after they failed to repay debts and investment products sold for fundraising.

China Oceanwide has to repay 20.9 billion yuan in bonds that will mature or are subject to redemption this year, according to Caixin calculations. In late May, one of its offshore units failed to repay $280 million of dollar bonds issued in 2019, when the company went on a global acquisition spree. In addition, the conglomerate owes billions of yuan in other types of debt.

In recent months, the property-to-finance conglomerate planned to sell assets at home and abroad to repay debt. That included the recent sale of IDG, a leading tech media and data company it acquired in 2017, to Blackstone for an enterprise value of $1.3 billion.

In May, China Oceanwide scrapped a deal reached in 2016 to take over U.S. insurance company Genworth Financial Inc. for $2.7 billion.

China Oceanwide and affiliates held a combined 71.23% of Shenzhen-listed Oceanwide Holdings. More than 95% of the holdings have been pledged for loans, public information showed.

According to WindInfo, the average price of China Oceanwide’s holding of the listed unit is 6.81 yuan per share. The stock closed at 2.69 yuan on Tuesday.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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