China Vanke’s shares fell after the troubled property developer said creditors rejected its revised plan to delay repayment of a 2 billion yuan (USD280 million) note that matured on Dec. 15. Instead, creditors approved a proposal to extend the grace period.
Vanke [SHE: 000002; HKG: 2202] was trading 2.2 percent lower at 4.82 yuan (68 US cents) in Shenzhen and down 2 percent at HKD3.47 (44 US cents) in Hong Kong as of the lunch break. The company’s bond prices reacted unevenly to the news. For instance, 21 Vanke 02 dropped 5.4 percent, 22 Vanke 02 fell 0.6 percent, 22 Vanke 04 remained flat, and 22 Vanke 06 jumped 6 percent.
According to Shanghai Pudong Development Bank, the bond’s community manager, 78 percent of creditors voted against Vanke’s second proposal to extend the repayment of 22 Vanke MTN004. However, they approved extending the grace period to 30 business days, moving it to Jan. 28.
Vanke said it accepts the bondholders’ meeting results and will continue to communicate and negotiate with all parties to find solutions for the note while safeguarding the long-term interests of all stakeholders.
On Dec. 5, Vanke unveiled three options to extend repayment of 22 Vanke MTN004: a 12-month delay, irrevocable full joint liability guarantees from major shareholder Shenzhen Metro Group, or other collateral measures provided by state-owned enterprises acceptable to investors. All three were rejected on Dec. 14.
Three days later, the company proposed a second plan to extend the bond’s principal repayment by 12 months, with accrued interest at an annual rate of 3 percent, and 60 million yuan (USD8.5 million) in overdue interest to be paid by Dec. 22. Additional credit support was also pledged.
On Dec. 17, Vanke proposed five options to extend a second bond maturing this month, 22 Vanke MTN005, with a principal of 3.7 billion yuan (USD526.4 million) due on Dec. 28.
Each option suggested a 12-month extension, with four requiring credit-enhancement measures and different repayment arrangements for principal and interest. Vanke held the first bondholders meeting for 22 Vanke MTN005 on Dec. 22, with voting scheduled to close at 3 p.m. on Dec. 25.
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