Debt-laden luxury villa developer Tahoe Groupfailed to repay a RMB 1.5 billion ($214 million) bond that matured on Monday, taking its total overdue borrowings to RMB 27.1 billion. The default underscores the growing financial stress on cash-strapped home builders hit by the double whammy of a slowing economy and the fallout from the coronavirus pandemic, reported Caixin.
The Fujian province-based developer, which reported a net loss of RMB 402 million in 2019, failed to raise funds to repay the three-year medium-term note, and interest of RMB 112.5 million, according to a filing to the Shenzhen Stock Exchange on Tuesday. The company also disclosed that it has a total of RMB 55.5 billion of debt maturing this year, but has only repaid RMB 4.8 billion so far and managed to extend the repayment period for another RMB 6.2 billion of debt due in the first half of the year.
Tahoe Group, which is 49% owned by Tahoe Investment Group and chaired by its founder Huang Qisen, is coordinating with the underwriters of the medium-term note to hold meetings with bondholders, according to another Tuesday filing, although no further details were provided.
The People’s Bank of China, China Securities Regulatory Commission and National Development and Reform Commission issued a joint statement on July 1 calling on companies to hold talks with bondholders about voluntary debt restructuring to try and avoid formal defaults.