Hong Kong real estate developer’s assets to be frozen
Hong Kong real estate developer Nan Hai Corporation’s assets will be frozen by creditors today.
The freeze is due to Nan Hai’s failure to meet part of its financial obligations on its $350 million credit enhanced notes which are due today. Nan Hai has been facing revenue struggles as a result of the COVID-19 pandemic and property, leading to a 70% decline in unaudited revenue from its cinemas and a 50% slump in real estate sales. Losses in 2021 amounted to $382 million. Trading in Nan Hai shares was halted on April 1, after having fallen by 5.4% on March 31. Employees of a Nan Hai subsidiary in Shenzhen were suspended from work for 6 months on June 1 in an effort to reduce overhead costs.
As creditors continue to take legal action against Nan Hai, expect that the corporation will continue working with them to restructure their assets and liabilities. With increasing default rates amongst property developers, expect Chinese authorities to continue with their current pattern of bailing out the defaulters, including Nan Hai, in order to project an image of stability ahead of the Communist Party Congress in late 2022.
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