New World’s refinancing — which would be one of the largest of its kind ever in Hong Kong — marks the end of months-long negotiations for a debt package that would pull it from the brink of default. The deal would push back HK$63.4 billion of borrowings that were set to come due this year and next, extending the maturities for three years, Bloomberg reported earlier.
Controlled by the family empire of Hong Kong tycoon Henry Cheng, New World has faced significant challenges amid a prolonged property downturn in Hong Kong and mainland China, following years of aggressive debt-driven growth. Investors had grown increasingly concerned about the firm’s ability to manage its debt, particularly after it decided to delay interest payments on four perpetual notes, triggering a bond selloff.
For its HK$24.1 billion in loans due in 2027 and beyond, the maturities would remain the same, but New World will have to add some credit enhancements and put up additional collateral.
New World didn’t respond to a request for comment outside of business hours.
See also: Hong Kong Exchange posts record profit on IPO, trading surge
The developer has put about 40 of its properties into the refinancing’s collateral pool, including its headquarters, New World Tower, as well as a second ranking mortgage on its commercial complex on the city’s waterfront, Victoria Dockside. The deal also carries a letter of comfort from Chow Tai Fook Enterprises Ltd.
Once closed, the deal would grant New World some short-term reprieve.
But strains will persist.
Attention is now shifting to whether the builder will be able to raise an additional HK$15.6 billion via a loan secured by the first ranking mortgage on Victoria Dockside. Part of the proceeds raised would repay the completed refinancing, Bloomberg News previously reported.
