In news on Hong Kong stocks, shares of Country Garden Holdings Co. (HK:2007) fell by 12.5% on Wednesday after a liquidation petition was filed against the company. This came as a blow to the company’s already struggling share price amid China’s property crisis. The news has reignited concerns among investors and homebuyers.
Country Garden is a major player in China’s real estate sector, holding the position of the largest private developer in the market.
Details About the Petition
According to a regulatory filing, Country Garden disclosed that a $205 million loan default led to a liquidation petition against the company. The petition was filed in Hong Kong by a creditor, Ever Credit Ltd., a part of Kingboard Holdings (HK:0148). The company has firmly opposed the petition, for which the first hearing is scheduled for May 17.
The news didn’t come as a surprise to many, as the company had already signaled troubled times ahead. In the second half of 2023, the company warned that it anticipates non-fulfilment of its offshore payment obligations within the specified grace periods.
Country Garden’s debt troubles appear to be hurting homebuyers’ sentiment, as evidenced by the slump in its sales. The company’s contracted sales in 2023 took a nosedive, plummeting to less than half of the previous year’s level. The contracted sales contribute the most to the company’s overall sales. Moreover, the company is seeking to sell a range of properties in Guangzhou city, aiming to raise $534.5 million as part of its efforts to restructure its offshore debt.
Over the last 12 months, Country Garden’s share price has lost around 70% of its value in trading.
