by Clare Jim
HONG KONG (Reuters) – Country Garden’s entire offshore debt will be deemed in default if the Chinese property developer fails to pay a $15 million coupon on Tuesday , the deadline for the 30-day grace period granted to him.
Failure to pay this sum should trigger default proceedings on other bonds, as provided for in the bond contracts.
Country Garden itself said last week that it may not be able to meet all of its payment obligations for its securities held overseas and it is now expected that the first Chinese developer will be the latest company in the sector to default on payment.
The group, which declined to comment, was also unable to honor other payment deadlines on securities held abroad in recent weeks.
With nearly $11 billion in offshore bonds and $6 billion in non-yuan-denominated loans, a Country Garden default would pave the way for one of the largest corporate debt restructurings in China.
Country Garden has selected Houlihan Lokey, China International Capital Corporation (CICC) and law firm Sidley Austin as advisors to review its capital structure and liquidity position.
Printed circuit board maker Kingboard Holdings last week went to court against Country Garden, a division of the property developer owed HK$1.6 billion ($189 million), having issued a statutory demand for repayment.
(Reporting Clare Jim, Claude Chendjou, editing by Kate Entringer)
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