May 14, Hejingtaifu Group announced that it had failed to pay $119 million on time on the mandatory redemption date of a senior note due in 2024, which constituted a default. Hejingtaifu also said in the announcement that since the second half of 2021, China's real estate industry has faced unprecedented challenges.
Speaking of it, it is not new for housing enterprises to default on overseas debt or even "lie flat". From the second half of 2022 to now, Fuli Real Estate, Greenland Holdings, Longguang Group, Rongchuang China and Huaxia Happiness have successively completed the overall restructuring of domestic or overseas debts, and China Evergrande, the "king of liabilities", has also put forward the overall overseas restructuring plan.
In this context, for KWG Group, a real estate company with a total market value of less than 3 billion and an annual turnover of less than 30 billion, it is not important to have it.
But the explosion of KWG Group still made Mr. Force Field deeply aware of it. Why? After thinking about it, Mr. Force Field felt that this kind of uneasiness, or anxiety, came from the disillusionment of two hopes.
Burst 1: If the financing channel is unblocked, can we avoid the explosion? The poor financing of
private housing enterprises is regarded as the main cause of the concentrated outbreak of this round of debt crisis, so since the moderate relaxation of the policy constraints on the financing of private housing enterprises in the second half of last year, market investors generally H ave hope for this, and even once had the feeling of expected reversal. This is also the background of the rebound of real estate stocks in November and December last year, in which KWG Group also rose from HK $0.75 to HK $2.79 at its peak. On
the refinancing side, KWG Group also made a lot of moves. In December 2022, it placed 235 million shares and raised a net amount of HK $467 million through the old and new way. The proceeds were used for refinancing existing debts and general corporate purposes; Earlier this year, it was also reported that the subsidiary of Hejingtaifu Group planned to issue corporate bonds, totaling no more than 1.2 billion yuan.
However, after less than half a year, what is the result? Whether it is the implementation of the rights issue or the planned bonds, it has not been able to pull it back from the thunderbolt point. Is the financing channel really the "eye of the question"? If not, even if the financing channel is smoother than before, can expectation be optimistic? Obviously, the answer given by KWG is no.
Burst 2: Debt Restructuring Extension, can Housing Enterprises Be Saved?
KWG Group's debt is a senior note due in 2024, issued in September 2022, with a size of about $795 million; According to the issuance terms of the notes, 15% of the principal amount of the notes will be compulsorily redeemed on May 14, 2023, with a total payable amount of about $119 million.
It should be noted that the $795 million senior notes issued in September 2022 are not "primary" debt, but are derived from two notes due in September 2022 and a note exchange offer due in September 2023. In other words, KWG Group has been unable to repay its debts since September 2022, and has been substantially extended once. What is the result? Can't you still pay it back in the end?
You know, in September 2022, Hejingtaifu Group completed the extension of two overseas debts, amounting to 700 million US dollars and 900 million US dollars respectively. The $119 million is not a large amount in absolute terms, but it still became the fuse of the company's explosion and triggered a series of cross-defaults on other debts.
Since the previous debt restructuring extension can not save KWG Group, can debt restructuring we are talking about now save it in the future? Since the debt restructuring extension can not save KWG Group, then the housing enterprises that are still trying to extend their debts, in addition to lingering on, can they go ashore by "dragging"?
Perhaps, as mentioned in the recent research report released by Kerui, after the completion of debt restructuring, the medium and long-term "blood return" self-help is the key; In order to truly get out of the predicament, the real estate enterprises should still take the guaranteed delivery as the main goal, actively market, promote sales and cash withdrawal, repair the basic market, and rely on sales repayment to enhance their "hematopoietic capacity".
However, with the economic background of deflation and the characteristics of the aging consumer group, how difficult is it to achieve the so-called "active marketing and promotion of sales"?
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