Country Garden May Spin Off Unit, Issue Bonds in Hunt for Cash

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Country Garden Holdings Co., controlled by China’s second-richest woman Yang Huiyan, is considering spinning off its property-management business, joining other Chinese developers exploring ways to raise cash.

The company, based in Foshan in southern China, also plans to sell 6 billion yuan ($966 million) of onshore three-year bonds and is on track to spin off its hotel assets, Chief Financial Officer Wu Jianbin said.

Chinese developers are moving to shore up their balance sheets amid a pickup in property sales via listings of separate units or by bringing in major equity investors. Evergrande Real Estate Group Ltd. said earlier this month it applied to list its soccer club and entertainment group on an exchange for smaller firms to raise cash.

China’s stock market decline may support the housing market by prompting investors to shift back to real estate, Wu said.

Country Garden will seek a separate listing for the property-management unit, which manages 100 million square meters (1.1 billion square feet) of projects, on the New Third Board, Wu said in the July 3 interview. The New Third Board is an exchange for smaller firms that started expanding nationwide in 2013.

“I know transaction on that board is not active, however, we could transfer the listing to the main board when conditions are mature,” Wu said. “But we are still doing research on the issue.”

Selling Bonds

The developer has applied for China Securities Regulatory Commission approval to sell the bonds and plans to issue 3 billion yuan in a first batch, Wu said. It will start preparing a medium-term note program after the bond issuance, he said.

Country Garden’s $900 million of 7.5 percent notes due in 2020 traded at 104 cents on the dollar as of 9:48 a.m. in Hong Kong, near the highest level since May 26, according to Bloomberg-compiled data. Its $750 million 7.5 percent notes maturing in 2023 traded at 100.9 cents, up 0.3 cents.

The company is in talks with local developers to buy or jointly invest in projects on more than 10 sites in first-tier cities, Wu said.

Shares of Country Garden fell 0.9 percent to HK$3.19 at 10:09 a.m. in Hong Kong. They rose 2.9 percent this year, compared with a 7.6 percent gain in the benchmark Hang Seng Index.

Earlier this year, Country Garden agreed to sell a 9.9 percent stake to Ping An Insurance Group Co. Greentown China Holdings Ltd. said in December it would sell a 24 percent to state-owned China Communications Construction Group and Sino Life Insurance Co. took a stake in troubled developer Kaisa Group Holdings Ltd. the same month.

— With assistance by Emma Dong, and Moxy Ying

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