Country Garden denies founder, chairwoman have fled China

BEIJING - Chinese property giant Country Garden denied that its founder and chairwoman had fled the country, as the debt-saddled builder flirts with a default that could send shockwaves through the industry.

One of China’s biggest developers,

Country Garden has racked up debts estimated at 1.43 trillion yuan (S$274 billion)

as at the end of 2022.

Unverified reports this week claimed founder Yang Guoqiang and his daughter Yang Huiyan, the firm’s chairwoman, had left China.

But the company quashed the speculation on Thursday, saying “the founder... and the group’s chair of the board of directors are currently working normally inside the country”.

“This rumour was posted with ulterior motives on multiple online platforms, causing a negative impact,” it said in an online statement. “We... reserve the right to take legal action over malicious rumours.”

Ms Yang took over as chair of Country Garden in March after her father stepped down from his position on the board.

She previously boasted the title of China’s richest woman after inheriting her father’s shares in 2007.

But her company is now on the front line of China’s property crisis, which has seen a string of debt-laden builders either defaulting or threatening to do so.

Bloomberg News reported in September that the billionaire boss of beleaguered builder China Evergrande – which defaulted in 2021 – was being held by police.

Country Garden’s bond holders are seeking urgent talks with the company and its advisers after it missed a US$15.4 million (S$21 million) coupon repayment, putting it at risk of default.

The company has not given an official indication, as at Thursday morning, of whether it has made payment.

But it told Bloomberg on Wednesday that it “expects that it won’t be able to meet all of its offshore payment obligations on time”.

Two bond holder groups have emerged, seeking urgent talks about a potential debt restructuring package, with a major one close to appointing either Moelis or PJT as financial advisers, according to sources.

Country Garden held 148 billion yuan in cash as at the end of June. It said it intends to use the funds to complete unfinished housing projects whose units were sold in advance, a common business model in China’s property sector.

The industry boasted decades of soaring growth that buoyed thousands of companies and became a major source of employment.

Today, construction and real estate account for around a quarter of gross domestic product.

But the authorities are now on edge as the creeping debt crisis fuels buyer mistrust, sends home prices plummeting and threatens to infect other sectors.

Official figures released on Thursday showed that prices of new homes fell in September in 54 out of 70 benchmark cities compared with the previous month.

Year on year, prices were lower in 45 out of the 70 surveyed cities, despite a slew of official measures in 2023 to shore up the ailing market.

China’s economy grew a forecast-beating 4.9 per cent in the third quarter, official data showed on Wednesday.

The expansion adds to a series of broadly positive recent readings, indicating a period of stability after months of weakness following the abolition of strict zero-Covid health curbs. AFP, BLOOMBERG