Hong Kong-based real estate developer Road King Infrastructure has issued a formal caution to investors regarding the potential default on its debt if they do not agree to the company’s proposals. The company is seeking to repurchase five offshore dollar bonds at a discounted rate and is requesting an extension to pay off the remaining debt.
According to the company’s tender offer and consent solicitation plan, Road King Infrastructure is offering to purchase the offshore dollar bonds at a price ranging from US$257.50 to US$515 per US$1,000 principal amount, with a maximum consideration for this repurchase capped at US$60 million. Additionally, the company is proposing to extend the maturity dates of other notes for a period of 3.5 years.
In a recent filing, Road King Infrastructure cautioned that failure to successfully carry out the tender offers and consent solicitations could lead to a default on its payment obligations. The company holds a diverse portfolio including residential flats in mainland China and Hong Kong, as well as expressway operations in Indonesia, and emphasized that it will explore alternative options if its current efforts are not successful, such as restructuring all of its offshore borrowings.
The company also disclosed that a significant portion of its cash reserves is located in China and will be utilized for the working capital required for its onshore projects, limiting the availability of funds for the abroad tender offers and consent solicitations due in July 2024.
In light of this announcement, Road King Infrastructure’s 6.7 per cent dollar bond due in September was reported to have traded at 52 cents on the dollar as of the most recent data compiled by Bloomberg.
As the real estate industry continues to navigate through the ongoing liquidity crisis, it is crucial for investors and stakeholders to closely monitor the evolving situation. The potential default risk faced by Road King Infrastructure underscores the challenges that persist within the Chinese property sector, and it is essential for all parties involved to consider the broader implications and explore viable solutions.
In conclusion, Road King Infrastructure’s warning regarding its default risk serves as a significant development within the real estate market. With the company’s extensive operations in China and Hong Kong, as well as its ventures abroad, there is a clear need for effective measures to address the challenges at hand. As the situation continues to unfold, it will be important to monitor how the company, investors, and regulatory authorities navigate through this pivotal phase in the real estate sector.