A unit of Chinese developer Fantasia Holdings Group Co. will work with a construction services provider, a move that signals a potentially new approach to resolve distressed assets under the country’s property slowdown.
Blue Green Shuangcheng Technology Group will assist Fantasia with reorganization plans for its onshore projects, negotiate with onshore creditors and accelerate asset sales, according to a Fantasia statement Friday. Blue Green, based in Hangzhou, was established by Cao Zhounan, the former chief executive officer of developer Greentown China Holdings Ltd., Fantasia said in a separate statement.
Fantasia, which is based in the southern coastal province of Guangdong and is controlled by founder Zeng Jie, also known as Baby Zeng, had faced resistance to its restructuring following its shock default in October 2021. Fantasia in January revealed a blueprint that seeks to swap $1.3 billion of offshore borrowings into shares and extend some debt.
The prospect of completing stalled housing projects for distressed developers has handed opportunities to construction services providers as well as luring embattled real-estate developers. Blue Green has been providing so-called “co-building” services to property projects in more than 100 cities, Fantasia said.
“Such co-operation would definitely be a trend, as it may help project delivery,” said Li Kai, chief investment officer of Beijing Shengao Fund Management Co. “But whether its debt recovery ratio could increase mainly depends on China’s home prices.”
The agreement, which will last for three years, could help the group in alleviating its liquidity pressures and aid communication with its onshore creditors, Fantasia said.
Last month, the developer completed restructuring of all its five local yuan bonds with a combined outstanding value of more than 6.4 billion yuan ($875 million), after securing holders’ support for extending two notes earlier this month, the Chinese developer said in a statement to Bloomberg News. The completion of debt restructuring paves the way for creating a healthy long-term operating environment for the company, Fantasia said at the time.
--With assistance from Qingqi She and Xinyi Luo.
(Adds analyst comment in the fifth paragraph)