Reuters reported on November 26 that Fantasia Holdings made an announcement on Thursday (November 25) evening that its main subsidiary, Hong Kong Fantasia Investment Company, was filed for a winding-up petition on Wednesday (November 24). The content was allegedly unpaid. The principal amount is related to the loan financing of US$149 million, and Fantasia Investment is the guarantor.
The announcement stated that Fantasia Holdings will seek legal advice to protect its legitimate rights and interests and take all necessary measures to resolve the matter, including constructive dialogue with the petitioner.
Fantasia Holdings is headquartered in Shenzhen. It was founded in 1996 by Zeng Jie (also known as Zeng Baobao), the niece of former vice chairman of the Chinese Communist Party Zeng Qinghong, and listed in Hong Kong in 2009.
The Wall Street Journal reported on November 26 that the main subsidiary of Fantasia had been petitioned for liquidation, which made its financial problems worse.
In October of this year, Fantasia failed to repay the principal amount of about 205.7 million US dollars in a maturing bond, and the bond defaulted unexpectedly.
Fantasia Holdings stated at the time that the company was actively negotiating with relevant creditors to reach an agreement with the creditors to renew or extend its loan or other arrangements; and said the group was facing liquidity problems.
Three international credit rating agencies, Fitch, Moody’s, and Standard & Poor’s, simultaneously downgraded Fantasia’s ratings to negative. China’s credit rating agency “China Chengxin International” issued a report on November 23, stating that as of that day, Fantasia had a total of RMB 6.447 billion in outstanding credit bonds, of which one of the bonds would expire on November 29, and the other The 949 million yuan bond will mature on December 17. However, Fantasia has not yet promised to pay the principal and interest of the aforementioned bonds.
The report pointed out that since October this year, the amount of contracted sales in Fantasia has fallen sharply, financing has also faced great obstacles, asset disposal has not made substantial progress, and the risk of bond default has increased.
Earlier this month, Fantasia Holdings stated that some lenders requested early repayment of loans.
In addition, Fantasia Holdings is facing a sharp decline in sales. The company said last week that total contracted sales in October were approximately RMB 2.11 billion (approximately US$330 million), a decrease of approximately 62% compared to the same period last year.
Including Fantasia Holdings, at least six Chinese developers have recently experienced such problems. They either defaulted on their debts or required investors to wait longer to repay them.
The situation in Fantasia is worse than guessed.
As the Fantasia debt crisis intensified, on the evening of October 11, Fantasia Holdings announced that the company’s independent non-executive directors Ho Man and Priscilla Wong had resigned.
In addition, Fantasia and its subsidiaries have been suspended in Hong Kong at the end of September, on the grounds that the company is facing an asset sale transaction. Mike Leung, investment manager of Wocom Securities Ltd., said bluntly, “The resignation of the director will make it difficult for Fantasia to resume trading.”
On October 30, Fantasia broke the news of internal layoffs. Lu Media’s “Financial World” weekly published a recording of an internal meeting held in the Southwest of the Fantasia on October 27.
In the recording, the person in charge of human resources in the southwest region of the company revealed that due to capital supervision, the company’s cash inflows have been “completely cut off” and “the situation is far more serious than what everyone has heard and guessed.”
The person in charge also revealed that the major regions of the Fantasia Group have begun to “slim down” one after another, and that the Southwest Company will be launched at the latest, and employees will decide to stay or leave on October 30.
Chen Youcheng, a Chinese financial scholar, told Radio Free Asia that Zeng Baobao is not so good now because her political backing has become the target of Xi Jinping’s authorities. Only those real estate companies that are not regarded as hostile forces by those in power can “escape.”
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