CK Asset (1113) has reportedly talked to HSBC (0005) to acquire the creditor's rights of The Corniche in Ap Lei Chau, an ultra-luxury residential project co-developed by Logan Group (3380) and KWG Group (1813).
The three-year debt is HK$10.2 billion worth of mortgage held by a syndicate of banks including HSBC, Standard Chartered (2888), and Industrial and Commercial Bank of China (Asia) to finance the project construction in 2021.
CK Asset may hinder the two cash-strapped mainland developers' ongoing offshore restructuring plans, since the syndicated loan is within the scope of the planned restructuring as an important credit enhancement item, Chinese media outlet Yicai said, citing sources related to Logan and KWG. The sources added that the two companies are worried that if the debt is transferred, CK Asset will oppose them to restructuring debts, forcing The Corniche to be auctioned and leading to a change of ownership.
Logan and KWG may fail to restructure the offshore debts totaling US$10 billion (HK$78 billion) if they lose the ownership of The Corniche, which is estimated at roughly HK$30 billion in valuation, sources told Yicai. The companies may fail to ensure timely delivery of presold homes and other normal operations, sources added.
Out of the 295 units of 1,340 to 9,633 square feet in The Corniche, only three have been sold since sales began in January.
The developers have pocketed around HK$534 million from the flats which each sold for HK$164 million to HK$185 million. This equates to about HK$50,000 per square foot, which is nearly 79 percent more expensive than Hong Kong's benchmark luxury property Bel-Air, according to Centaline Property. Logan and KWG each own 50 percent of The Corniche, after they paid a record HK$16.8 billion for the land in overlooking the South China Sea. That translates to HK$22,188 the land premium per square foot of floor space.
Back in early June, Bloomberg reported that there are potential buyers interested in acquiring the syndicated loan of The Corniche, although sources close to the syndicate said they did not consider selling the loan.
In last August, Logan Group announced that it would suspend the payment of interest due on several overseas debts, and subsequently launched an offshore debt restructuring
