Grand Ming says that the sale of iTech Towers is a way to reduce debt (Image: DC Byte).
Grand Ming Group has requested waivers from its lenders after it breached financial covenants governing HK$4.8billion ($610m) in outstanding loans. This is the latest distress signal in Hong Kong for the city’s struggling builders.
The chairman of the company, Chan Hung Ming, has obtained waivers on HK$2.75 Billion in borrowings that were tied to the default. This was triggered by a lack of meeting thresholds for the ratio between consolidated EBITDA and consolidated interest expenses. According to a filing on Tuesday with the Hong Kong Stock Exchange
According to Grand Ming which reported last week an influx of debt, the breach allows the lenders the right to declare the outstanding principal, accrued interests and all other amounts immediately due and payable. Annual loss of HK$292.1– reversing a profit of HK$298.5 in the previous year.
Chan stated in the filing that the group was still seeking waivers from other creditors in relation to the breach. As of the date of this statement, the group had not received a demand from the lenders to repay the loans immediately under the loan facility. HKEXissued a profit warning, indicating it expected to suffer a loss of between HK$280 and HK$310 for the year ending 31 March. This follows a profit of around HK$298.5 for the previous 12 months.
Grand Ming Group Chairman Chan Hung Ming seeks relief from his lenders. (Getty Images).
According to the company’s board, the loss was primarily attributable due to impairment losses on own-use assets and development projects as well as unrealised losses on investment properties.
To boost its balance sheet liquidity, the company has already taken steps to do so. It has entered into advanced discussions with Bain Capital to sell two data centre projects located in Hong Kong’s New Territories. A Mingtiandi article published last month identified Bain Capital as a potential buyer. According to market sources, the US fund manager has entered exclusive negotiations to purchase iTech Tower 3.1 & iTech Tower 3.2. The price could be as high as HK$2.15billion ($274m) according to sources.
Grand Ming announced in a notice to the HKEX on 19 June that it had entered exclusive talks for the sale of iTech Tower 3.1 and iTech Tower 3.2 for up to HK$2.15 billion ($274 million). The potential purchaser was required to complete a financial due diligence as well as ensure the land and technical aspects of the project were to their satisfaction.
In addition to securing the necessary government approvals, Grand Ming must also have secured utility connections and other milestones. Grand Ming’s statement framed the sale as an opportunity to improve its balance sheet.
Debt Scramble (20190013)[20190014]The update comes after the New World Development, a Hong Kong property group, successfully refinanced HK$88.2billion ($11.2billion) in offshore debt last week.
New World – controlled by the billionaire Cheng Family – said it had arranged with its banks facilities that allowed for more flexibility in payments, including tranches with different maturities. The earliest maturity date is 30 June 2028.
