China’s property market has hit another hurdle as developer Modern Land (China) abandoned its plan to repay a part of a $250 million junk bond and extend it just days before it was due to mature, reports the South China Morning Post.
The Beijing-based builder scrapped a solicitation process related to a 12.85% $250 million bond due on October 25, citing liquidity issues and saying the exercise “would not be in the best interest of the company” and its stakeholders. It had earlier proposed to pay $87.5 million of the principal and extend the payment deadline on the balance by three months.
The decision was made despite an earlier pledge by the company’s chairman and its president to lend Modern Land RMB 800 million ($125.1 million) to ease its cash crunch. It came on the same day the heavily-indebted China Evergrande Group acrimoniously terminated a deal to sell some of its assets to a rival in an attempt to raise $2.6 billion of cash and avert a default.
Modern Land is now planning to engage an independent financial adviser to assess its capital structure, liquidity profile, operating and financial condition “with a view to achieving a feasible solution to its current liquidity issues,” it said in an exchange filing late Wednesday.