China Aoyuan said that it will not make payments on four dollar bonds, triggering a cross-default on all other offshore debt of the company, in a filing with the HKEX late on Wednesday. Aoyuan said that the decision to not pay was on account of “careful consideration to its liquidity and in order to preserve its limited cash resources and maintain fairness among all of its creditors pending a holistic debt restructuring”. Aoyuan will not repay its $188mn 4.2% bond due today or its $500mn 8.5% bond due Sunday. It will also not pay coupons worth $15.3mn on its 7.35% 2023s and 7.95% 2024s before the end of the 30-day grace period on January 21. Aoyuan added that it was exploring asset sales and is in preliminary discussions with potential investors and purchasers. The developer further said that it is working closely with external advisers to complete an assessment and due diligence in order to present its restructuring proposal.
Aoyuan’s dollar bonds are trading at distressed levels of about 16 cents on the dollar.
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