NWD seeks $15.6b loan pledging Victoria Dockside

Bloomberg and staff reporter

Hong Kong developer New World Development (0017) has proposed using one of its most valuable assets, Victoria Dockside, as collateral for an additional loan of as much as HK$15.6 billion, according to people familiar with the matter, as liquidity pressure continues to mount.

The company sent proposed terms of the three-year loan to banks in recent days, the people said, adding that proceeds will be used for the prepayment, repayment, purchase or repurchase of the company's existing debt.

Victoria Dockside, which houses luxury mall K11 Musea, is worth about HK$88 billion based on an assumed price of about HK$30,000 per square foot, according to Bloomberg Intelligence calculations. That would represent around 20 percent of NWD's HK$445 billion in total assets.

New World, controlled by the family of Hong Kong tycoon Henry Cheng Kar-shun, faces one of the highest debt burdens among Hong Kong developers, as the city remains mired in a long property slump. The latest loan talks come as the company is still in discussions on two other potential loans, in a bid to refinance borrowings that are set to mature this year and beyond.

A New World spokesperson said that the company continues to engage with its stakeholders, including its lenders and bondholders, and is discussing ongoing financing options in compliance with its debt obligations.

Victoria Dockside is New World's flagship commercial complex located at the core area of Tsim Sha Tsui waterfront in Kowloon with a total gross floor area of approximately 3 million sq ft, also accommodating K11 Atelier, K11 Artus, as well as Rosewood Hong Kong and Rosewood Residences.

Recently, US-based alternative investment manager Ares Management approached banks seeking to purchase their New World loan positions, in hopes of partaking in the company's refinancing exercise.

Earlier, New World was reported to be in talks with CR Longdation, a subsidiary of China Resources, to sell K11 Art Mall for HK$9 billion. But the deal was in gridlock as CR was only willing to offer about HK$6 billion.