China’s Sunac seeks second extension of onshore bond payment – sources

HONG KONG/SHANGHAI, June 22 (Reuters)Cash-strapped property developer Sunac China 1918.HK is talking to investors about a second extension of part of an onshore bond payment due at the end of this month, two people with knowledge of the matter said on Wednesday.

It’s rare for a company to look to extend a payment again in a short period of time, highlighting the stressed liquidity of the country’s No. 3 real estate developer by sales.

The 400 million yuan ($59.57 million) payment due June 30 is the first of six installments of a 4 billion yuan redeemable bond CN163376SH= which Sunac had extended from April 1 by 18 months.

Financial news and research provider REDD first reported on talks between Sunac and major bondholders.

Sources said Sunac was still raising funds for the payment and planned to pay part of it on the due date and extend the rest. Details are still being finalized and are expected to be announced next week, still subject to bondholder approval.

Sunac declined to comment.

The next installment worth 600 million yuan is expected to be paid on September 30.

Sunac is trying to ease its cash crunch by extending its debt obligations and divesting assets, after its sales were hit by COVID-19 this year and it was unable to secure new financing.

A source told Reuters that Sunac was working on a restructuring of its offshore debt, aiming to finalize it within the next two to three months. He was also talking to public entities about strategic investments in the company.

Last month, Sunac missed the coupon payment deadline on a $742 million offshore bond and said it did not expect to make future payments on other bonds, adding to a flurry defaults in China’s indebted real estate sector.

($1 = 6.7152 Chinese yuan renminbi)

(Reporting by Clare Jim in Hong Kong, Steven Bian in Shanghai and Shuyan Wang in Beijing; Editing by Tomasz Janowski)

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