April 25, 2018 / 9:12 AM / 7 months ago

China developer Zhonghong's shares fall to 4-year low as overdue debt rises

HONG KONG, April 25 (Reuters) - Zhonghong Holding , a medium-sized Chinese property developer based in Beijing, saw its shares fall to a near four-year low on Wednesday after it said earlier this week its debt overdue has now increased to 2.3 billion yuan ($363.91 million).

Shenzhen-listed Zhonghong said in a stock exchange filing on Monday another 1.1 billion yuan of debt has become overdue over the past month, bringing the total to 2.27 billion yuan, accounting for around a quarter of its 2016 net assets.

Zhonghong, whose parent bought a 21 percent stake in U.S. marine park operator SeaWorld Entertainment for $429 million last year, said it is in talks with lenders to resolve the issue and is making efforts to raise funds to repay the debts.

Shares of Zhonghong closed down 2.7 percent on Wednesday at 1.43 yuan, the lowest since July 1, 2014.

Zhonghong’s announcement shows that even relatively bigger developers are not immune to the overall pressure in the property market, Cindy Huang, director at S&P Global Ratings, told a property sector conference call on Wednesday when asked about Zhonghong. “We can expect more (such announcements from firms),” she said.

National property sales are expected to be flat or drop 5 percent this year and liquidity has become much tighter under China’s tightening policies to cool speculative activities.

No one at Zhonghong’s headquarters in Beijing answered phone calls by Reuters on Wednesday. The company also did not respond to an emailed request for comment.

Zhonghong said earlier this month it swung to a net loss of 2.5 billion yuan last year and expects to also post a net loss in the first quarter.

The company is undergoing a restructuring after all the shares held by its controlling shareholder, accounting for 26.55 percent of the company’s total, were frozen by a Chinese court earlier this year.

China HKBridge Holdings said in February it would set up a private equity fund to raise about 13 billion yuan to participate in the debt, asset and shareholding restructuring of Zhonghong, the parent company of Zhonghong Holding. ($1 = 6.3203 Chinese yuan renminbi) (Reporting by Clare Jim; Editing by James Pomfret and Muralikumar Anantharaman)

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