New World asks banks to extend due dates on loans

Bloomberg

Hong Kong property firm New World Development (0017) is in talks with banks to extend the due dates of some bilateral loans, said people familiar with the matter.

It's unclear how much of a delay the builder is seeking for each loan, but its efforts show the company is exploring ways to alleviate financial pressure after recording its first annual loss in two decades.

Controlled by the family empire of tycoon Henry Cheng Kar-shun, NWD has been one of the most closely watched property firms in the credit market for its high leverage.

Its net debt to equity was 82.7 percent as of the end of last year, compared with 41.4 percent at rival Henderson Land Development (0012) and 21.2 percent at Sun Hung Kai Properties (0016), according to Bloomberg Intelligence.

New World, one of the most indebted major Hong Kong developers, has been grappling with a slumping property market, high debt levels and tighter investor scrutiny in recent years. Some of its perpetual notes slid to record lows on Wednesday and its shares have plunged more than 25 percent in the past month.

New World also has asked lenders to waive a potential breach of a debt-ratio-related covenant on certain facilities, other sources said.

A loan breach might not lead to defaults if banks agree to grant a waiver, but it could undermine creditors' confidence in a company's debt-service ability.

Management changes in recent months are another key factor that's weighing on securities of New World, whose 11 Skies commercial complex opening in phases next to the Hong Kong International Airport is one of the first things many visitors to the city see.

The builder replaced its chief executive last month in an abrupt change. The company named Echo Huang Shaomei as chief executive, replacing Eric Ma who was in the job for only two months.