Modern Land Shares Dive After Resuming Trade Amid Repayment Demands

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By Yi Wei Wong
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Shares of Modern Land (China) Company fell as much as 38% after the Chinese property developer resumed business amid demands from creditors for early repayment of debt.

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Shares of Modern Land, trading for the first time since October when it failed to repay a US$250 million dollar bond, were down 37% at HK$0.24 in mid-morning trade in Hong Kong.

The Beijing-based developer sought to resume business early Monday, saying that some holders of its offshore bonds, along with other creditors, had sought early repayment of the debt, and that it was seeking restructuring of offshore debt and creditor-related safekeeping. Was negotiating for a discount. enforcement action.

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The company said its total outstanding principal offshore senior notes amounted to approximately US$1.35 billion. It said it had appointed financial advisors to help assess liquidity and “draw an overall plan for feasible remedial actions.”

Trading in the debt securities of the company remains suspended.

Liquidity levels of Chinese developers have suddenly plummeted due to tight government restrictions on the real estate sector amid debt levels and concerns of overheating.

Nivedita Sunil, an emerging markets analyst at Lombard Odier Investment Managers, said more than 400 new regulations were issued for the Chinese property sector last year, including restrictions on mortgages and bank loans.

“What started out as a peculiar risk is now becoming settled,” Ms Sunil said in a research note. “Now offshore USD China has 30% default rate [high-yield] real estate market.”

Modern Land attributed its failed bond payments last year to the macroeconomic environment, falling home sales and an unexpected liquidity crunch due to the COVID-19 pandemic. It initially planned to buy back some US$250 million of its bonds, and possibly extend the maturity date on the remainder, but later scrapped the plan, citing liquidity problems.

The company posted contracted sales of CNY36.05 billion in 2021, down from CNY42.21 billion in 2020.

Write to Yi Wei Wong at [email protected]

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