SINGAPORE (Reuters) - Chinese developer Guangzhou R&F Properties Co is raising as much as $2.5 billion by borrowing from major shareholders and selling a subsidiary, highlighting the scramble for cash as signs of distress spread in China’s property sector.
In separate exchange filings, R&F Properties said it had secured HK$8 billion ($1 billion) from its two biggest shareholders, while Country Garden Services Holdings Co Ltd said it would buy an R&F subsidiary for as much as 10 billion yuan ($1.55 billion).
The announcements came with markets rattled on Monday as China Evergrande Group, the country's most indebted developer, teetered towards default and said it had started repaying creditors with properties instead of money.
They also underline the severity of the funding pressure now facing the developers, as investors start to worry that a messy collapse at Evergrande could reverberate through a sector that accounts for roughly a quarter of China's economy.
R&F has a junk rating and was downgraded earlier in the month by Moody’s and put on a negative credit outlook by Fitch.
Its shares fell 7.3% to an almost 13-year low on Monday, before it announced its new funding sources after trading hours. It said that “barring any unforeseen eventuality,” it now expects to have enough cash to cover short-term obligations.
R&F has about 12 billion yuan in bonds due by October 2022, most trading at distressed levels.
In a separate statement Country Garden Services, the property management unit of developer Country Garden said it had agreed to buy Wealth Best Global, a property management arm of R&F, for as much as 10 billion yuan.
($1 = 7.7863 Hong Kong dollars)
($1 = 6.4655 Chinese yuan renminbi)
Reporting by Tom Westbrook; Editing by Mark Potter