KUALA LUMPUR (Jan 18): While news of a failed fundraising effort by Country Garden Holdings Co shook investors' confidence in its shares and bonds in the last few days, its Malaysian unit said its parent company isn't worried about it and that it is business as usual here.
"According to our headquarters in Shunde, China, the company has not issued the 'US$300 million convertible bond', as reported by Bloomberg. Initially, it was one of many options the company had. However, after [a] market survey and gauging the impact, the reported method was obviously an unfavourable move.
"In order to continuously optimise the debt structure, the company pays attention to different financing channels, and the bank also has the possible terms for different products. The company will not consider offerings when market conditions are not suitable," Country Garden's Malaysian unit, Country Garden Pacificview Sdn Bhd, said in an emailed reply.
It was responding to how the crisis engulfing China's property sector is impacting Country Garden and its operations here in Malaysia, amid fears that the reportedly failed fundraising effort may be a harbinger of waning confidence.
According to Bloomberg, Country Garden has the largest pool of outstanding dollar bonds among China's biggest property firms, excluding defaulters, with some US$11.7 billion outstanding.
Some of its dollar notes plunged to record lows recently in the wake of a report that it had failed to win sufficient investor support for a possible convertible bond deal. "While Country Garden isn't expected to face imminent repayment pressure — it has US$1.1 billion of dollar bonds due this year and had 186 billion yuan (US$29.3 billion) available cash as of June last year — risks may emerge if it's seen to have limited access to funding," Bloomberg wrote.
Meanwhile, Country Garden Pacificview further said in its email that the group's sales have grown steadily, according to its recent interim financial report, and that its financial position had been further solidified with lower net debt ratio and financing cost, "demonstrating the robust operational strength and sound financial management abilities of China’s leading real estate developer".
"In short, the company has stable sales revenue, strong cash flow and low debt. The company wasn’t worried nor swayed by the report at all. Operations in Malaysia is business as usual," it added.
Malaysia's largest foreign real estate developer Country Garden is developing the US$100 billion Forest City project in Johor.
In September last year, the South China Morning Post reported, quoting sources, that the developer had reduced its employment and sales team in Malaysia by two-thirds over a two-year period, amid declining sales at the Forest City project due to the Covid-19 pandemic.
In particular, it reported that its Malaysian staff had been reduced to 500 as of June, following three rounds of retrenchment in the past 18 months, from 1,700 in 2019.
However, this was later refuted by Country Garden Pacificview, which said: "Under the current economic situation, there have been an in- and outflow of employees, and the overall staff strength has been maintained at a normal standard with a stable headcount."
While it conceded that the Covid-19 pandemic had disrupted the pace of its development, it said this had not changed "the company’s determination and belief in exploring the local market".