China’s Zhenro Properties collapses, says it may not have the funds to pay off debt

HONG KONG/SHANGHAI, Feb 21 (Reuters) – Shares and international bonds of Zhenro Properties (6158.HK) fell further on Monday after it said existing internal resources may be insufficient to repay debt due in March, including including a $200 million perpetual bond. he has already said he would buy again.

Shares of Hong Kong-listed Zhenro plunged more than 12%, against a 1.9% drop in the Hang Seng Mainland Properties Index (.HSMPI).

Its dollar bond due Aug. 3 traded at 17.262 cents to the dollar, down from 20.345 on Friday.

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Shanghai-based Zhenro, the country’s 30th-largest property developer by sales, said in a Jan. 4 filing that he told his trustee he would repay a perpetual bond due March 5 in full.

The company’s internal funds available for debt servicing have become increasingly limited since the announcement was made due to unfavorable market conditions, it said in a filing late Friday.

Zhenro added that he asks the perpetual bond holders to waive and forgive any defaults and claims against the company. He proposes to pay $17.5 per $1,000 of capital if bondholders agree.

Analysts said Zhenro could be subject to legal action if it does not repay the bond after releasing its Jan. 4 statement, and failure to redeem the bond could also trigger a cross default.

Zhenro has another $50 million bond due March 6, according to Refinitiv data, while the total amount of international bonds outstanding is $3.65 billion.

The company’s September 2024 onshore exchange-traded bond, however, jumped more than 22% when the market opened on Monday, triggering an automatic suspension, although only one trade was recorded.

Zhenro shares and bonds were first hit on Feb. 11 amid reports that the company intended to restructure its dollar bonds. The firm released a statement on Feb. 14 calling the reports misinformation and reserving the right to take legal action. Read more

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Reporting by Clare Jim in Hong Kong and Andrew Galbraith in Shanghai; Editing by Christopher Cushing and Edwina Gibbs

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