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Lai Sun Development has proposed extending the maturity of its USD 493 million bond due in July by three years, while offering to repay 20% upfront. The move reflects continued financial pressure among Hong Kong developers despite some recovery in the residential market. The company has been engaging with bondholders and plans to seek formal approval in June. Weak office and retail segments, rising borrowings, and recent losses have added to the strain, prompting the developer to explore liability management options to stabilise its financial position.
Lai Sun Development is planning to extend the maturity of its USD 493 million dollar-denominated bond, which is scheduled for repayment in July, by an additional three years. The proposal includes an upfront repayment of 20% of the total amount due, with the remaining balance to be deferred. Advertisement
The company has been holding discussions with bondholders over the past few days to explain the plan and gather initial feedback. It is expected to formally seek bondholders consent in June. In response to queries, the developer confirmed that meetings are underway and acknowledged the details of the proposed restructuring.
If approved, this move would place Lai Sun among a limited number of developers in Hong Kong that have undertaken liability management exercises to address debt obligations. The step comes at a time when several real estate firms in the region continue to face financial stress, even as the residential market shows signs of gradual recovery.
In the past few months, other developers have also taken similar measures. New World Development had completed a debt exchange exercise, reducing its perpetual bonds and senior notes by around USD 1.2 billion. Meanwhile, Road King Infrastructure is in the process of restructuring approximately USD 1.6 billion in offshore debt.
Industry experts believe more property companies could adopt such measures in the near term, mainly due to continued weakness in the office and retail segments. Lower rental income and declining asset valuations have impacted overall cash flows, increasing the need for debt restructuring.
Market data showed that Lai Sun's 5% bond due in July saw a decline in investor sentiment, with its price falling to 80.712 cents on the dollar, compared to 84.782 cents earlier in the week.
Apart from the July maturity, the company also has a smaller Hong Kong dollar bond worth USD 23 million due in November. Following this, it does not face any major bond repayments until 2029, which could provide some medium-term relief if the current proposal is approved.
Financially, the developer has been under pressure. It reported a net loss of HKD 1.2 billion (USD 153.17 million) for the six-month period ending January, significantly higher than the HKD 118 million loss recorded in the previous year. Its total borrowings stood at HKD 25.8 billion, while available financial resources, including cash and undrawn credit lines, were limited to HKD 4.9 billion.
This gap between liabilities and available liquidity highlights the urgency behind the proposed bond extension.
Source Reuters
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