Source: Securities Times

There's another big news at Country Garden.

Country Garden originally expected the board of directors to review the 2023 results on March 28, but now there is a “contract break” situation. Late on the night of March 28, Country Garden announced that due to continued fluctuations in the industry, the complex business environment, the ongoing debt restructuring work, the large number of projects, and the heavy workload involved in due diligence, Country Garden may not be able to comply with the listing rules and publish its 2023 report before March 31.

Meanwhile, Country Garden said that if the 2023 results cannot be published before the specified March 31, it is expected that stock trading on the exchange may be suspended at 9:00 a.m. on April 2, pending publication of the 2023 annual results announcement.

According to information, since the real estate industry entered a period of deep adjustment, many housing enterprises have experienced liquidity difficulties. Country Garden is not the first real estate company to announce delays in issuing financial reports. Previously, about 40 companies, including Contemporary Real Estate, Zhongyuan Construction, and Shangkun Real Estate, announced that they intend to postpone the publication of their 2023 reports.

Country Garden delayed the release of its annual results report after the market had already anticipated it. Country Garden said that even if the company suspends trading, there will be no real impact on the company's work of insurance delivery, production and operation, and debt restructuring.

As of March 28, Country Garden closed at HK$0.485 per share, with a total market capitalization of HK$13.57 billion.

Delay in publication of 2023 Annual Report

Late on the night of March 28, Country Garden announced that due to continued fluctuations in the industry, Country Garden is facing an increasingly complex business environment, and more information needs to be collected to make appropriate accounting estimates and judgments to reasonably reflect changes in the industry and the company in Country Garden's consolidated financial statements for the year ended December 31, 2023.

At the same time, as Country Garden's debt restructuring work is still ongoing, given the number and wide distribution of Country Garden projects, and the amount of work and complexity involved in related due diligence, Country Garden will need more time to collect relevant financial data to carefully evaluate Country Garden's current and future financial resources and financial obligations. Country Garden is working with financial advisors and legal advisors to evaluate Country Garden's condition and is working closely with various creditors to develop practical solutions as soon as possible.

Country Garden anticipates that it will take longer to complete the preparation of Country Garden's consolidated financial statements for the year ended December 31, 2023. As a result, Country Garden's 2023 results could not comply with the listing rules and be published before March 31, 2024.

It is worth mentioning that Country Garden previously announced on March 18 that it would hold a board meeting on March 28 to approve the 2023 results. Due to delays in publication of the above 2023 results, the above board meeting will be postponed.

Country Garden said that despite the above situation and disclosure in the announcement, the board of directors wishes to emphasize that the board of directors and company management are committed to continuing to actively discuss debt restructuring issues with creditors, and will continue to work closely with auditor PricewaterhouseCoopers to announce the 2023 results and send out the 2023 annual report as soon as possible.

Stock trading may be suspended

Meanwhile, the Country Garden announcement mentioned news that the company may suspend stock trading.

Country Garden said that according to section 13.50 of the listing rules, if the company is unable to announce its 2023 results on or before March 31, 2024, it is expected that trading of the company's shares on the Hong Kong Stock Exchange will be suspended from 9:00 a.m. on April 2, 2024 in accordance with the listing rules, pending publication of the 2023 annual results announcement.

Country Garden's board of directors believes that the suspension of trading will not have a substantial impact on the company's operations. Currently, the domestic security guarantee work and overseas debt restructuring work in Country Garden are progressing in an orderly manner, and related work has received strong support from stakeholders, including relevant local governments and overseas creditors.

Disclosure of recent developments

In the announcement, Country Garden gave a detailed introduction to its latest situation and current main work.

First, in terms of guaranteed delivery, Country Garden said it will continue to make every effort to ensure the smooth progress of the delivery process. Throughout 2023, Country Garden and its joint ventures and joint ventures have delivered more than 600,000 housing units, with a total delivery area of 71.62 million square meters, covering 249 cities in 31 provinces across the country.

At the same time, Country Garden continues to respond positively to regulatory calls, clarify the main responsibilities of business entities in the delivery process, insist on earmarking funds, strictly manage pre-sale monitoring funds, and rely on policies to help deliver projects through various support policies of national and local governments for the industry. Furthermore, Country Garden places great importance on partnerships with suppliers. At a time of current market fluctuations, Country Garden maintains continuous communication with major contractors and suppliers to ensure that all parties maintain consensus on project progress and funding arrangements, and continue to effectively guarantee the normal operation of the project and complete the task of securing the building through negotiations on reasonable payment plans.

Second, in terms of liquidity, Country Garden is also making every effort to improve the liquidity situation by making efforts to revitalize large commercial assets and reduce various non-core and unnecessary operating expenses.

Meanwhile, Country Garden said that the company attaches great importance to debt risk mitigation. Over the past few months, Country Garden has been cooperating with financial advisors and legal advisors to evaluate Country Garden's situation and develop debt restructuring plans to mitigate current liquidity problems. On the date of the announcement, Country Garden is still carrying out related work with financial advisors and legal advisors. It is also actively engaging in constructive dialogue with creditors to expedite the formulation of a restructuring plan agreed upon by all parties on the premise of respecting the current legal status and legal payment order of all creditors.

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