HONG KONG: Shares of embattled Chinese property developer Country Garden jumped as much as 30% in resumed trade on Tuesday following a nearly 10-month trading suspension as it tries to advance debt restructuring negotiations with its creditors.
The stock had been suspended from trading since April 2, 2024 pending the publication of its 2023 full-year and 2024 interim financial reports after it defaulted on $11 billion of offshore bonds in late 2023.
That default deepened a debt crisis in the economically crucial property sector that had also seen defaults by major peers including China Evergrande Group.
Country Garden is now in a restructuring process that aims to cut its $16.4 billion of offshore debt by 70%.
It told a Hong Kong court on Monday in a liquidation hearing filed by a creditor against the company that it expects to reach restructuring terms with creditors next month, and was granted an adjournment until May 26.
A trade resumption is useful to Country Garden’s restructuring negotiations as the plan includes a convertible bond option for creditors.
If Country Garden is able to get creditors’ approval for the debt revamp plan, that would help the developer push back against the liquidation petition.
A liquidation order against Country Garden would worsen the outlook for China’s crisis-hit property sector, which policymakers have yet to revive successfully despite waves of stimulus measures since 2022.
Narrower loss expected
Country Garden last week said it expected to post a narrower annual loss in 2024 after reporting a record 178.4 billion yuan ($24.33 billion) loss in its long-overdue 2023 results.
“It is evident from the…results that the Group is carrying out a business with a sufficient level of operations and assets of sufficient value to support its operations, which warrants the continued listing of the shares of the company,” Country Garden said in a filing on Tuesday.
Shares of Country Garden, one of the country’s top developers during the boom years, jumped as much as 30% in morning trading to HK$0.63, compared with its last trading price of HK$0.485 before the suspension in April.
It last traded up 19.6% at 0333 GMT.
Since its shares were suspended, the Hang Seng Mainland Properties Index has lost 5%, while Sunac China, which has completed its offshore debt restructuring, and Logan Group, which is still in the process of restructuring, gained 34% and 62%, respectively.
Chinese authorities have launched a series of supportive policies during the period since Country Garden’s shares were suspended, including relaxing purchase restrictions in top-tier cities, as they vowed to stop the market from falling further.
Country Garden expects to reach terms with creditors in Feb, lawyer tells court
“The stock surge doesn’t mean anything; Country Garden’s shares have come down from near HK$20 at peak,” said Eugene Law, director of China Galaxy International.
“Trade resumption doesn’t mean the debt problem of the company is resolved. The whole sector is still struggling to recover,” Law added.
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