Country Garden, a real estate development company that is in financial crisis, has said that it will be unable to repay its loans and will be unable to make payments on future overseas debts due to a sharp drop in sales due to the spiraling real estate crisis in China.
The announcement, made on the Hong Kong Stock Exchange on Tuesday, is a de facto statement that Country Garden, once China’s largest home builder, is now in default with debts of about $187 billion. . Country Garden is one of the biggest causes of the collapse of China’s real estate market, which drove Evergrande, another giant real estate developer, into bankruptcy.
In recent months, Country Garden has been trying to stave off bankruptcy by selling assets to raise cash and negotiating with creditors to restructure its debt and delay payments. However, the company continues to struggle with sales of newly built apartments, and the cash flow necessary to continue debt repayments has been delayed.
Country Garden announced last month that it was able to make interest payments with close monitoring to avoid default, but the company expects to take on nearly $15 billion in debt in the form of bonds, notes and banks within the next 12 months. He said he needed to pay it back. and other borrowings.
Country Garden said pre-order sales of unfinished apartments, a key indicator of future income, fell for the sixth consecutive month to 6.17 billion yuan ($862 million) in September. This was an 81% decrease compared to the same month last year.
“The prevailing market conditions have made it difficult for the Group to raise sufficient cash to increase liquidity in the short term. As a result, the Group’s cash position remains under significant pressure. ,” the company said in a statement.
Country Garden said its $60 million loan is past due and that it does not expect to be able to pay all of its foreign debt when it falls due or within the grace period.
