Hong Kong developer Grand Ming Group has avoided risking default by obtaining waivers from its lenders for outstanding loans totalling HK$4.8 billion (US$611.5 million).
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“The group has successfully obtained waivers from all lenders in respect of the breach,” the company said on Monday. “Accordingly, the lenders will not demand immediate repayment of the respective bank borrowings under the loan facilities from the group as a consequence of the breach. The group will repay the loan principal and interest in accordance with the original repayment dates.”
On July 8, the developer informed Hong Kong’s stock exchange that it had breached financial covenants under its loan facilities, according to its audited annual results for the year that ended on March 31. It said it had obtained waivers from certain lenders with respect to the breach, relating to bank borrowings of around HK$2.8 billion, but it was still in talks to seek waivers for the rest.
Incidents and rumours of banks calling loans – demanding immediate payment – have increased as property developers grappled with repayments amid a prolonged property market slump. And as the value of property collateral has declined, regulators have had to step in with relief measures for borrowers.
“As banks, it is generally not efficient for us to jump in and manage asset auctions ourselves,” said a Hong Kong-based loan syndication and distribution banker. “Therefore, if we can avoid this, we typically look to give more time and space, hoping to navigate the challenges together.”
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Analysts said banks were reluctant to call loans because the negative consequences could spill over into the broader market and onto the loan books of other lenders.