![]() ![]() 11, according to Hong Kong stock exchange data.Ī state-engineered takeover of one company by another is not without precedent in China. Ping An said after Reuters first published this report that it no longer holds Country Garden shares. Ping An was a natural choice because it is based in Guangdong and has been a major Country Garden shareholder, according to two of the sources. GUANGDONG SOLUTIONĪuthorities are keen for the Country Garden's liquidity problems to be resolved within Guangdong, three sources said. The property developer last month missed a deadline to pay a $15 million coupon and the market has deemed it to be in default on its offshore bonds which total some $11 billion.Ĭountry Garden has said it expects to be unable to meet all of its offshore debt obligations and hopes to seek a "holistic" solution to its difficulties.Ĭhinese authorities are eager to make the proposed takeover a possible template for other financially troubled developers, two of the sources also said. ![]() If Ping An were to become Country Garden's controlling shareholder, authorities would like it to inject capital in stages to ease the developer's liquidity problems, according to four sources. Reuters was not able to reach Yang for comment. Neither the PBOC nor the NFRA responded to Reuters requests for comment.Īuthorities want Ping An to take a stake of more than 50%, according to one person with direct knowledge and one person briefed on the plan.Ĭountry Garden's largest shareholder with a stake of about 52% is Yang Huiyan, chairperson and daughter of a co-founder. The National Financial Regulatory Administration (NFRA) is also involved in the talks, they added. Ping An has been asked to conduct due diligence on Country Garden, two sources also said, adding that authorities understood the insurer was a listed company answerable to shareholders.Ī fifth person with knowledge of the matter said some talks between Ping An and the Guangdong local government about a rescue of Country Garden took place in September.Īll sources declined to be identified due to the sensitivity of the matter.ĭiscussions between Ping An and authorities are being led by officials in the financial markets department of the People's Bank of China (PBOC), which is the central bank, and include Country Garden, said two sources. Talks between authorities and core Ping An leaders began in late August and are still at an early stage, said two of them. While in China companies can rarely ignore a request from the central government, the three sources said Ping An has been asked to come up with details of the plan and will have leeway to negotiate terms of any deal. "Only equity injections, such as corporate takeovers or nationalisations, are likely to turn around the confidence of home buyers and investors and materially change the situation." MITIGATING RISKĪuthorities are keen that any risks posed by Country Garden's liquidity problems should not spill over to the wider economy, said three of the sources. "If this is true, it will have a very significant positive impact on the property and capital markets," said Xu Tianchen, senior economist at the Economist Intelligence Unit.
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