Country Garden suddenly： suspension, delay!

On the evening of March 28,Country Garden announced that it would delay the publication of its 2023 annual results and send its 2023 annual report.

According to the announcement, Country Garden is facing an increasingly complex business environment, and the company needs to collect more information to make appropriate accounting estimates and judgments, so as to reasonably reflect the changes in the industry and the company in the consolidated financial statements of the Group for the year ended December 31, 2023.

At the same time, as Country Garden’s debt restructuring work is still in progress, in view of the large number and wide distribution of the Group’s projects and the heavy workload and complexity involved in relevant due diligence, the Group needs more time to collect relevant financial information to carefully evaluate the Group’s current and future financial resources and financial obligations.

Therefore, it is estimated that it will take longer for the company to complete the preparation of the consolidated financial statements of the Group for the year ended December 31, 2023, and it is impossible to comply with the relevant provisions of the listing rules and publish the 2023 annual results before March 31, 2024.

Country Garden said in the announcement that the Group is working with financial advisers and legal advisers to assess the Group’s situation, and working closely with various creditors to formulate practical measures as soon as possible. In addition, the Board of Directors of Country Garden Group and the management of the company are committed to continuing to actively negotiate with creditors about debt restructuring, and will continue to work closely with the auditor PricewaterhouseCoopers to announce the 2023 annual results and send the 2023 annual report as soon as possible.

According to the relevant provisions of the Listing Rules, if Country Garden cannot announce its 2023 annual results on or before March 31, 2024, it is expected that the trading of Country Garden’s shares will be suspended on the Hong Kong Stock Exchange from 9: 00 am on April 2, pending the announcement of its 2023 annual results.

The Board of Directors of Country Garden Group believes that the suspension of trading will not have a substantial impact on the company’s operations. At present, the company’s domestic security building work and overseas debt restructuring work have been promoted in an orderly manner, and related work has received strong support from stakeholders including relevant local governments and overseas creditors.

Country Garden also disclosed some latest information. In the whole year of 2023, Country Garden Group and its joint ventures and associates completed the delivery of more than 600,000 houses, with a total delivery area of 71.62 million square meters, covering 249 cities in 31 provinces across the country.

Country Garden said in the announcement that on the date of the announcement, the Group continued to actively respond to the call, clarified the main responsibility of the enterprise main body in the delivery process, insisted on earmarking funds and strictly managed the pre-sale monitoring funds, and at the same time relied on various support policies of the state and local governments for the industry, relying on policies to help the project delivery. In addition, the Group attaches great importance to the cooperative relationship with suppliers. The Group maintains continuous communication with major contractors and suppliers to ensure that all parties have a consensus on the project schedule and funding arrangements, and through negotiation of a reasonable payment plan, it will continue to effectively ensure the normal operation of the project and complete the task of ensuring the delivery of the building. In terms of liquidity, the company is also striving to revitalize assets such as bulk businesses and reduce non-core and non-essential operating expenses, so as to keep the delivery bottom line and try its best to improve the liquidity situation.

Country Garden said that the company attaches great importance to debt risk resolution. In the past few months, the company has been working with financial advisers and legal advisers to evaluate the Group’s situation and formulate debt restructuring plans to alleviate the current liquidity problem. On the date of the announcement, the company is still working with financial advisers and legal advisers. The company also actively engaged in constructive dialogue with creditors, and accelerated the formulation of a restructuring plan agreed by all parties on the premise of respecting the existing legal status and legal repayment order of all creditors. Country Garden hopes that all stakeholders will maintain their confidence in the company, and support the company to continue its efforts to promote the practical and feasible best restructuring plan to achieve a long-term and sustainable capital structure.

Extended reading:

Country Garden responded: Objection!

On March 26th, in response to the news that Country Garden’s equity was frozen, Country Garden responded to the shanghai securities news reporter that the equity freeze involved cooperation projects of regional companies. "Because there is a dispute between our company and the partner in cost calculation and pre-distribution of profits, the partner applies to the court for property preservation. Such disputes are normal commercial disputes, and the court has not yet made a final judgment. The value of the frozen equity is not the same as the subject matter of the dispute. Our company is ready to raise an objection to the court for the excessive preservation of the partner. " Country Garden said.

On March 25th, the reporter learned from Tianyancha’s information about legal proceedings that Country Garden Real Estate Group Co., Ltd. recently added several pieces of information about stock right freezing. The enterprises whose shares were executed included Shenzhen paladin Phase V Equity Investment Partnership (Limited Partnership) and Shenzhen Huixin No.22 Investment Consulting Partnership (Limited Partnership), etc. The amount of frozen shares ranged from 39 million yuan to 6.705 billion yuan, and the total frozen shares exceeded 10 billion yuan. In addition, the company also has information such as the executor and the consumption restriction order.

On February 28th this year, Country Garden announced on the Hong Kong Stock Exchange that the company was informed that Ever Credit Limited (the petitioner) filed a liquidation petition against the company with the Hong Kong High Court on February 27th, 2024, concerning the unpaid term loan with principal of about HK$ 1.6 billion between the petitioner (the lender) and the company (the borrower) and accrued interest. The company will strongly oppose the petition.

Regarding the petition for liquidation, Country Garden responded to the shanghai securities news reporter that the debt amount of the company involved in Jiantao Group accounted for a very low proportion of the overall interest-bearing liabilities abroad, and the radical action of a single creditor would not have a significant impact on the company’s security building, normal operation and overall restructuring of overseas debts. Referring to other cases of listed real estate enterprises in default in the industry, it is more common for individual creditors to apply to the Hong Kong court for company liquidation. The company resolutely opposes the petition, and will seek legal advice, take all necessary actions, and actively and properly defend with the consulting team.

On March 4th, Country Garden issued a further announcement on the liquidation petition, saying that the company would consider whether to apply to the Hong Kong High Court for an authorization order in the light of the progress of its overseas reorganization at a later stage. The company will inform its shareholders and investors of the relevant decisions in due course and make further announcements.

Country Garden, New News

Country Garden introduced partners for one of the company’s projects.

On the evening of March 24th, Country Garden announced that Guangzhou Xingchengsi, an indirect subsidiary of the company, had entered into a cooperation agreement with Guangdong Zhongwei and the project company. Accordingly, Guangzhou Xingchengsi and Guangdong Zhongwei agreed to jointly build and develop White Swan Pond International Financial Center on the property in Guangzhou through the project company for sale.

The project company refers to Guangzhou Jinsi Real Estate Development Co., Ltd., a wholly-owned subsidiary of Guangzhou Xingchengsi. Guangzhou Property refers to land AF020106 located in the core area of White Swan Pond Business District, Liwan District, Guangzhou, with a site area of 13,968 square meters, a plot ratio of 15 and a floor area of 209,520 square meters, and the land is designated for commercial and enterprise purposes.

According to the announcement, the project company acquired Guangzhou property through open market bidding and auction in 2017 and acquired the land use right of Guangzhou property in 2018. It is planned to build a 64-storey high-rise commercial building with a 5-storey basement on the property in Guangzhou.

According to the appraisal report issued by Guangdong Tongde Real Estate Land Assets Appraisal and Planning Surveying and Mapping Co., Ltd. dated March 21, 2024, as of February 29, 2024, the market value of land use right of Guangzhou property was about 3.122 billion yuan.

In addition, as of the date of announcement, the certificates and approvals required for the construction and development of the building on the property in Guangzhou have been obtained. However, the construction of Guangzhou property has been suspended, and only the underground continuous wall and three internal supports have been basically completed, while excavation works are under way.

According to the cooperation agreement, Guangzhou Xingchengsi is regarded as having provided 3.1 billion yuan to the project company, while Guangdong Zhongwei agreed to provide further funds for the project totaling about 2.8 billion yuan. It is expected that the construction of the basement floor of the building will be completed in 2025, and the capping and project completion will be in 2026 and 2027 respectively.

In addition, Guangzhou Xingchengsi and Guangdong Zhongwei also reached a supplementary agreement on the same day, which made a supplementary agreement on the potential impact of mortgage on the performance of the cooperation agreement.

Country Garden explained the reasons for introducing partners for the project in the announcement. Country Garden said that the project was hindered by various complicated factors. For example, the assets of one of the intermediate shareholders of the project company (a fellow subsidiary of Country Garden) are currently restricted by the freezing order issued by the Guangdong Higher People’s Court. In addition, Guangzhou Property itself has been mortgaged to several mortgagees as a guarantee for the medium-term notes issued by Country Garden Real Estate Group Co., Ltd. (the same subsidiary of Country Garden) in 2023 with an amount of 1.7 billion yuan due in 2025.

Country Garden said that in view of the above-mentioned complicated factors and the large amount of funds that the project will require, it is difficult for the company to resume construction or sell properties in Guangzhou. Introducing Guangdong Zhongwei as a partner to jointly develop Guangzhou property will provide a timely and urgently needed solution to the difficulties faced by the company in realizing Guangzhou property.

Editor: Shao Ziyi? ?Proofreading: Zhang Yu?Photo editor: Zhao Yanzhen