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Shares of China Vanke declined after the troubled property developer announced that its creditors rejected a revised plan to delay repayment of a 2 billion yuan (approximately USD 280 million) note that matured on December 15. Instead, creditors approved a proposal to extend the grace period.
As of midday trading, Vanke was down approximately 2.2% at 4.82 yuan (roughly 68 US cents) in Shenzhen and down 2% at HKD 3.47 (about 44 US cents) in Hong Kong. The company’s bond prices responded variably; for instance, the 21 Vanke 02 bonds plummeted 5.4%, the 22 Vanke 02 bonds slightly declined by 0.6%, the 22 Vanke 04 bonds remained unchanged, and the 22 Vanke 06 bonds rose significantly by 6%.
About 78% of creditors voted against the company’s second proposal to extend repayment of the 22 Vanke MTN004 bond, according to the Shanghai Pudong Development Bank, the bond’s community manager, which announced the results on the Shanghai Clearing House website. However, the creditors agreed to prolong the grace period by an additional 30 business days, pushing the deadline to January 28.
Vanke expressed acceptance of the creditor vote and said it would continue engaging and negotiating to find solutions for the note and protect the long-term interests of all parties involved.
On December 5, Vanke presented three options for extending repayment of the 22 Vanke MTN004 bond: a 12-month delay, the addition of irrevocable full joint liability guarantees from its major shareholder, Shenzhen Metro Group, or other collateral measures acceptable to investors offered by other state-owned enterprises in the city. All three options were rejected on December 14.
Three days later, the company proposed a second plan, which included a 12-month extension of the bond’s principal repayment and an annual interest rate of 3%, with about CNY 60 million (roughly USD 8.5 million) in overdue interest payable by December 22. Vanke also committed to providing additional credit support.
On December 17, the company suggested five different options to extend another bond maturing this month, the 22 Vanke MTN005, which has a principal of CNY 3.7 billion (around USD 526.4 million) and is due to mature on December 28. All options involved extending the maturity by 12 months, with four requiring Vanke to offer credit-enhancement measures, each involving various repayment arrangements for principal and interest.
The company held the first bondholders’ meeting for the 22 Vanke MTN005 extension on December 22, with voting due by 3 p.m. on December 25.
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