New World Development Co. is in preliminary discussions with some banks to extend an about HK$88 billion ($11.2 billion) loan by two years, according to people familiar with the matter. The move could pave the way for a capital injection for the cash-strapped Hong Kong builder. The company plans to repay 10% of the loan principal as part of the extension plan, which it aims to complete by January. The loan was secured in Hong Kong’s largest ever debt refinancing in 2025, and marked the end of months of negotiations that pulled New World from the brink of default. The agreement helped it push back about HK$63.4 billion of borrowings that were set to come due in 2025 and 2026 for three years.
The billionaire Cheng family, which controls New World, has been floating equity injection proposals for months. If the rights issue plan, which could be announced as soon as November, does go through, it would be a major sign of financial support from the family for the developer, which posted a $3.6 billion loss for its latest fiscal year. New World, one of Hong Kong’s oldest property giants, has numerous residential, office and mall projects across the city as well as mainland China. Like many developers in the region, it’s been caught in a prolonged property downturn. Falling home prices, weak consumer sentiment, and a high interest rate environment have squeezed revenues and pushed up borrowing costs.
New World is seeking to address its near-term bond maturities with an exchange offer launched earlier this month covering roughly $991 million in bonds, though participation by an early-bird deadline was less than the cap the company had set. New World’s total debt was about HK$143 billion at the end of June, according to its latest results announcement. A portion of that debt is due in 2028. The company has been looking at possible deals with other investors to help improve its liquidity. Bain Capital, for example, is exploring a potential investment that could also see the Cheng family inject fresh capital. Earlier this year, Blackstone Inc. walked away from a $4 billion tie-up with New World after the Cheng family refused to give up control of the company. New World has also gotten relief from Hong Kong’s Airport Authority, which recently agreed to waive billions of dollars in rent the company had committed to pay for its struggling 11 Skies project near the airport. Under the deal, the Airport Authority would fully take over the HK$18 billion mega mall-and-office complex, while New World would give HK$3 billion in cash and services to the body.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing