Chinese Developer Sinks After HSBC Subsidiary Files Liquidation Petition
Hang Seng Bank filed a petition with Hong Kong’s High Court
A Hong Kong subsidiary of HSBC Holdings HSBA -0.35%decrease; red down pointing triangle wants to liquidate debt-troubled Times China, in another instance of creditors seeking to recoup funds from developers amid China’s protracted property slump.
Hang Seng Bank 11 -2.26%decrease; red down pointing triangle filed a petition with Hong Kong’s High Court to wind up Times China due to its financial obligations of around US$267 million, the developer said Tuesday. It added that the court has set the first hearing for the petition on July 3.
Times China’s shares fell 36% to 15 Hong Kong cents (US$0.02) in early trade, bringing its year-to-date losses to 42%.
Times China, like other Chinese developers, has been hammered by the overall weakness in the Chinese economy, particularly in the real-estate sector. Property sales have dropped, leading to impairment charges and debt defaults for developers.
Another Chinese lender, China Construction Bank (Asia), last week filed a similar petition against Shimao Group, a Hong Kong-listed developer, relating to obligations of around US$200 million.
“The board is of the view that the petition does not represent the interests of other stakeholders of the company and may impair the value of the company,” Times China said. It added that it would oppose the petition.
Times China said it continues to communicate with offshore creditors to work on its restructuring plan. It aims to announce the terms of the plan as early as possible.
“Deteriorating profitability” remains a significant worry for major developers, given the sluggish process of reducing debt, UOB Kay Hian analysts wrote in a recent research note.
Most developers in China are likely to continue reporting falling sales this year, and more debt defaults could be possible, they add.