Investors are now eyeing Country Garden chairperson's huge $5.3 billion fortune for help with the struggling property developer's dues
- Country Garden, a massive Chinese property developer, missed interest payments on two dollar bonds this week.
- Investors are watching whether Country Garden's chair, Yang Huiyan, will use her own money to support the company.
China's real-estate crisis is getting real for its billionaires, with Country Garden's chairperson caught in its crosshairs.
Bondholders are watching if Country Garden's chair, Yang Huiyan, will use her vast fortune to pump money into the company which is currently facing a liquidity crisis, according to a Bloomberg report on Friday.
The company was founded by her father Yeung Kwok Keung — who is also referred to as Yang Guoqiang — in 1992.
On Friday, Yang and her family expect to receive dividends that collectively pay out more than the $22.5 million interest payments on two dollar bonds that Country Garden missed on Monday. The company has a 30-day grace period before it goes into official default.
On Friday, Yang could receive $28 million in dividends from her personal stake in Country Garden's services unit, according to Bloomberg calculations. A foundation owned by her family could also receive another $35 million in dividend payouts, per the media outlet.
The embattled real-estate company faces 7.8 billion Chinese yuan, or $1.1 billion, in payments for notes and bonds in September.
The scrutiny on Yang's next move follows the precedent from real-estate giant peer Evergrande. The company's founder, Hui Ka Yan, was reportedly told by Beijing in late 2021 to use his own money to pay down the company's $300 billion debt pile.
Once China's richest woman, 42-year-old Yang is holding onto a $5.3 billion fortune as of August 11 after her wealth tanked by 46.4% so far this year, according to the Bloomberg Billionaires Index. Most of her wealth comes from a 52.60% stake in Country Garden Holdings, Insider previously reported.
On Thursday, Country Garden said in a profit warning that it has been working on "self-rescue by all means," including securing its cash flow, expanding financing, and cutting expenditures.
While Thursday's stock exchange filing states Yang has given "strong support" to the company in the past, Country Garden did not specifically state if the family will continue supporting the company amid the crisis.
Yang and her family pumped in about 38.6 billion Hong Kong dollars, or $4.9 billion, of liquidity into the company through loans, by increasing their shareholding, as well as purchasing bonds and scrip dividends, the filing said.
Country Garden is expected to record a net loss between 45 billion to 55 billion yuan for the first half of 2023 due to "severe difficulties and challenges" for the property market since 2021, per the filing. In comparison, the property giant reported a net loss of 6.1 billion yuan in 2022 — the company's first full-year loss since its 2007 listing in Hong Kong.
And analysts are already trying to get a reading on the underlying messaging from the company's announcement.
"We think this is likely the prelude to an ultimate credit event, and the company might already be in preparation for debt restructuring," JPMorgan Chase analysts wrote in a Friday note responding to the company's announcement.
Country Garden's next move will very much depend on Beijing's stance, Iris Chen, an analyst at Nomura, wrote in a Thursday note seen by Insider.
"We believe conversations with the regulator will be important during this period, and the company will make a decision based on the government's attitude, especially as the central government is pushing for property sector easing at the current moment," Chen added.
Country Garden did not respond to a request for comment from Insider.
Hong Kong-listed Country Garden Holdings shares are down 6% to 98 Hong Kong cents apiece at last check. They are down 58% so far this year.