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October 11 (Businesshala) – Chinese developer Cynic Holdings said on Monday it is likely to default on a $250 million bond, as they do not have enough financial resources to make payments by the maturity date.
The case highlights the impact of China’s Evergrande Group, which is grappling with $305 billion in debt, on the rest of the high-yield sector as liquidity dries up and sales slow.
Cynic said in September that a creditor had sought repayment of a total of $75.4 million of principal and accrued interest due to overdue payments on onshore financing, and that the creditor had appointed receivers on shares of certain offshore units.
The creditor’s enforcement triggered conditions under which other financing arrangements and $710 million of bonds could become payable immediately if creditors choose to enforce it, the company said.
Cynic said it was in talks with lenders and other stakeholders on repayment arrangements. Payment on the first batch and final interest payment on the $250 million bond is due on October 18.
The Shanghai-based developer has total liabilities of $1.01 billion under the offshore financing arrangement.
Cynic shares have been at a trading halt since September 20, after a nearly 90% drop that day. (Reporting by Arundhati Dutta in Bengaluru Editing by Lewis Havens and Mark Potter)