Cash-strapped Chinese developer Zhenro Properties plans to dispose of assets worth up to 4 billion yuan ($632 million) in the first half, according to three sources with knowledge of the matter.
The firm added that it is in talks with state-owned firms to dispose of the assets, Reuters said, adding that Zhenro told investors in a call on Wednesday the debt it will seek extensions include bank loans and asset-backed securities.
The Shanghai-based developer is in the process of asking holders of a $200 million perpetual bond due March 5 to waive claims against the company if it defaults.
It is also seeking to extend the maturity of five bonds due 2022, worth around $1 billion, to March 2023.
Zhenro, China’s 30th largest developer by sales, has seen its shares seesaw over the past 48 hours. The stock rose as much as 12% on Tuesday after a 13% drop on Monday.
It pared some gains on Wednesday to close up 9.5%. The stock has plunged 78% in the year to date.
The company’s international bonds slumped further on Monday after it said existing internal resources might be insufficient to repay debt due in March.
Its dollar bond due August 3 traded at 15.871 cents on the dollar, compared with 20.345 on Friday.
The company’s comment was contrary to a previous commitment to redeem a $200 million perpetual bond due on March 5 and raises fresh concerns over liquidity at the Shanghai-based developer and among its peers.
Analysts were scathing over the commitment, however. “Zhenro Properties … seems to have taken a leaf out of the Fantasia playbook,” Stephen Aldred and Shasha Dai of credit intelligence provider Reorg wrote.
“Either that or someone had been drinking diesel oil when the company announced that it would redeem $200 million 10.25% senior [perpetual bond].”
- Reuters, with additional editing by George Russell