Country Garden billionaire bags big payouts as default looms: Report

All eyes are on Yang Huiyan, the billionaire chairperson of Chinese real-estate giant Country Garden, as bondholders hope that she will utilise her personal funds to sustain the company, according to a Bloomberg report.

Yang, whose estimated net worth is $5 billion, would receive nearly $28 million through dividends on Friday for her personal stake in the company’s service unit, according to Bloomberg's calculations. The $22.5 million bond payments that the company missed this week can be paid out by that amount. Another $35 million in cash payouts could go to a family-owned foundation.

The question of whether Yang would use her personal funds to settle Country Garden's obligations has gained attention in the wake of creditors pressuring Hui Ka Yan, the founder of the bankrupt developer China Evergrande Group, to use his own funds to support his company.

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Country Garden, formerly the biggest builder in China and regarded by investors as a “model enterprise”, would join a long list of defaulters, including Evergrande, if it does not make the payments during the allotted 30-day grace period.

With the company’s dollar bond expiring in 2026 selling at approximately 10 cents on the dollar, investors have already factored in a potential default. On Thursday, Country Garden was downgraded by Moody’s Investors Service from B1 to Caa1. The firm stated that it could lose up to $7.6 billion in the first half.

“Over the past 12 months, Country Garden has shown higher willingness to pay compared to other privately-owned developers such as CIFI and Evergrande,” Bloombrg quoted Zerlina Zeng, a senior credit analyst at Creditsights Singapore. “However, with contracted sales continuing to tumble, it is hard to say whether they will continue to use their own funds to keep the bondholders afloat.”

Yang has provided Country Garden with “strong support” since its offering, the company claimed in a Thursday night filing with the Hong Kong exchange. Together with family members, this amounts to around HK$38.6 billion ($4.9 billion) in loans, shareholding increases, bond purchases, and scrip dividends, it said, without mentioning how much of the support arrived recently.

Yang this month transferred a sibling-controlled charity foundation a sizable portion of her personal ownership in Country Garden Services, which she also chairs, in a move that alarmed the market. Analysts at UBS Group AG described the timing as ”unusual.” The property manager shifted the payment date for its 2022 payments and special payouts a few days later.

The unit paying the dividends, Country Garden Services, said in a statement to Bloomberg that the payout plan, which was approved in May, is unrelated to any “third-party factor”. The services company explained that it moved forward the dividend payment date from August 30 to Friday because it has enough of cash and wants to relieve investors’ fears about its stability.

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