Country Garden plans to distribute $28 million in dividends to its chairperson. Bondholders are interested in her substantial $5.3 billion ANBLE to aid the struggling property developer.

Country Garden plans to distribute $28 million in dividends to its chairperson. Bondholders are interested in her substantial $5.3 billion ANBLE to aid the struggling property developer.

China’s Real Estate Crisis Puts Country Garden Chairperson in a Tight Spot

Country Garden

The real estate crisis in China is taking its toll on billionaires in the country, and Country Garden’s chairperson, Yang Huiyan, finds herself caught in the crosshairs. Bondholders are eagerly watching to see if Yang will use her substantial resources to inject money into the company, which is currently facing a liquidity crisis.

Country Garden, a major Chinese property developer founded by Yang’s father, Yeung Kwok Keung, is under pressure to make interest payments on two dollar bonds that it missed earlier this week. Investors are now turning their attention to Yang, as she stands to receive $28 million in dividends from her personal stake in Country Garden’s services unit — an amount that surpasses the $22.5 million in missed interest payments.

However, the situation is not as straightforward as it may seem. Yang’s family is also expected to receive an additional $35 million in dividend payouts through a foundation they own, adding another layer of complexity to her decision-making process.

Yang, once China’s richest woman, currently holds a $5.3 billion fortune, a significant decrease of 46.4% this year alone. Most of her wealth stems from her majority 52.60% stake in Country Garden Holdings. With her wealth under pressure, the financial world eagerly awaits Yang’s next move.

The spotlight on Yang’s potential actions follows a similar situation faced by Evergrande, another real estate giant in China. Hui Ka Yan, Evergrande’s founder, was reportedly urged by Beijing to use his personal wealth to tackle the company’s enormous debt burden. This signals a potential precedent for Yang as she navigates the crisis surrounding Country Garden.

Country Garden itself faces upcoming payments of 7.8 billion Chinese yuan ($1.1 billion) for notes and bonds in September. The company recently issued a profit warning, highlighting the challenges it has faced in the property market since 2021. The filing stated that Country Garden has been exploring various avenues for self-rescue, such as securing cash flow, expanding financing, and cutting expenditures.

Nevertheless, analysts remain skeptical. JPMorgan Chase analysts wrote in a note that they believe Country Garden’s recent announcement may be the prelude to an eventual credit event, indicating the possibility of debt restructuring. The company’s next move may also be influenced by Beijing’s stance on the property sector, as the government has been pushing for easing measures.

At present, Country Garden has not responded to requests for comment regarding the ongoing situation. The company’s stock exchange listing shows its shares down 6% to 98 Hong Kong cents apiece, marking a 58% decline so far this year.

Country Garden’s predicament serves as a testament to the struggles faced by Chinese real estate developers amid the ongoing crisis. The decisions made by Yang Huiyan and her family will undoubtedly have significant implications not only for their own wealth but also for the broader Chinese property market as it grapples with economic uncertainty.

As the saga unfolds, the financial world will closely monitor the actions of Yang and her family, waiting to see if they will step in to rescue Country Garden from its current state of financial peril. The outcome will offer insights into the strength of the Chinese property market and the support it can expect from its billionaire stakeholders.