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New World Development, a leading Hong Kong-based property developer, has launched a debt exchange offer worth up to USD 1.9 billion to restructure its existing perpetual securities. The initiative includes issuing new perpetual securities worth up to USD 1.6 billion and USD 300 million in new notes. The company aims to extend debt maturities, improve liquidity, and stabilize its capital structure amid prolonged challenges in Hong Kong's property market. Discussions involving PJT Partners and key bondholders were held last week to evaluate the proposal's terms.
Hong Kong developer New World Development has initiated a debt exchange offer of up to USD 1.9 billion to reorganize its outstanding perpetual securities. According to its exchange filing, the company plans to issue up to USD 1.6 billion in new perpetual securities, while the remaining USD 300 million will be issued as new notes. Advertisement
The initiative is part of the company's efforts to manage its capital structure and preserve liquidity in a difficult financing environment. This move follows months of scrutiny over the firm's financial position, as it faces ongoing market pressure and limited credit availability.
The company had earlier denied media reports suggesting it was planning any liability management exercises related to its debt instruments. However, it later confirmed that the current exchange offer was intended to improve its balance sheet flexibility and strengthen its financial resilience.
Earlier this year, New World deferred coupon payments worth USD 77.2 million on four perpetual bonds that were due in June. The developer, among the most indebted in Hong Kong's property sector, has been actively seeking refinancing options to ease its debt burden and maintain liquidity, following two changes in its top management last year.
New World's shares gained 3.1% after reversing earlier losses, outperforming the Hang Seng Properties Index, which rose 1.5%. Data from Duration Finance indicated that the company's perpetual bonds remained largely stable during the trading session.
Last week, prior to the announcement, investment bank PJT Partners held discussions with New World regarding the proposed terms and potential reactions from senior noteholders and perpetual bondholders, according to a person familiar with the matter. The source added that bondholders were yet to receive formal advice on the exchange offer.
PJT Partners, along with law firm Kirkland & Ellis, represents an ad hoc group holding roughly 20% of the bonds. Reports by Debtwire first revealed details of PJT Partners' engagement with the developer. Both New World and PJT Partners have not provided further comments on the discussions.
The company's financial stress stems from years of expansion that coincided with Hong Kong's political unrest, the COVID-19 pandemic, and a prolonged property market downturn. Despite securing an USD 11.24 billion loan refinancing package earlier this year, New World continues to require fresh funding to manage its debt load and sustain operations amid slow property demand.
In a separate development, the developer also obtained a term loan facility worth up to HKD 5.9 billion (USD 759.58 million) from Deutsche Bank in September, further supporting its refinancing efforts.
Source Reuters
5th Jun, 2025
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