On April 21, Chinese real estate developer Huaxia Happiness announced that due to a phase of liquidity crunch, the company and its subsidiaries recently added new debt principal and interest in the form of bank loans, trust loans and other debts in the amount of RMB 7.032 billion that could not be repaid as scheduled. Up to now, Huaxia Happiness has defaulted on debt principal and interest totaling 47.836 billion yuan.
Reuters reported on April 22 that Huaxia Happiness has fallen into a debt quagmire, and in March it announced that the company and its subsidiaries had failed to repay as scheduled the principal and interest on debts amounting to 5.595 billion yuan, including bank loans, trust loans and other forms of debt.
Prior to that, Huaxia Happiness had a number of bonds that failed to pay interest or pay off on time. Both “20 Huaxia Happiness MTN001” and “20 Huaxia Happiness MTN002” triggered the cross-protection clause, and the holders’ meeting failed to form a waiver resolution, and the above-mentioned medium-term notes expired early on March 19; the company said it is communicating with the lead underwriter and the debt committee to promote the extension arrangement. The company said it is communicating with the lead underwriter and the debt committee to promote the extension arrangement.
Huaxia Happiness ranked 10th in sales amount of Chinese real estate enterprises in 2017.
Huaxia Happiness started in Hebei and acquired a large amount of residential land in the Beijing-ring area. in 2017, the Beijing-ring area began to restrict purchases, and the sales growth rate of Huaxia Happiness, which mainly laid out the Beijing-ring area, fell back to less than 20%, and dropped to single digits in 2018, with the capital chain then tensed.
According to Kerry data, in 2020, Huaxia’s sales were 96.3 billion yuan, down about 1/3 year-on-year.
According to Shell Research Institute data, as of the end of the second quarter of 2020, Huaxia Happiness had a gearing ratio of 77%, a net debt ratio of 217% and a cash-short debt ratio of 0.47 after excluding pre-receipts, with all three red lines touched.
In early February this year, Ping An of China and ICBC led a debt committee for Hua Xia Happiness’ debt dispute. It is reported that Ping An of China had proposed a version of debt restructuring plan, but did not negotiate with the Hebei provincial government.
According to an April 21 report by the land media Caijing, people familiar with Huaxia Happiness said that, in response to Huaxia Happiness’ debt crisis, the Hebei provincial and Langfang city governments have set up a work team, and the debt restructuring plan is expected to be introduced in June.
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