Country Garden is raising funds to avoid default, as the troubled real estate giant battles a liquidity crisis which some fear could spread to China’s wider economy and even spill over abroad.
The Foshan, Guandong-based company said Wednesday that it plans to issue 350 million shares at HK$0.77 apiece to pay off loans it owes to a creditor, according to a stock exchange filing. The total value of the shares would be $270 million Country Garden won’t receive any cash from the transaction, the filing said. Instead, the stocks will be used to set off the money it needs to repay Kingboard Holdings, a manufacturer of laminates based in Hong Kong.
Country Garden is slated to report its first-half earnings later on Wednesday. Investors are closely watching the report for details about the company’s cash flows and how it may cope with its debt problem. Country Garden’s financial troubles have been in focus this month as it faces a cash crunch.
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