Chinese Developer Modern Land Asks to Delay Bond Repayment

Restrictions on credit to the sector have helped trigger a crisis at Evergrande and put pressure more broadly on developers’ stocks and bonds. A default last week by

Fantasia Holdings Group Co.

1777 1.82%

on $206 million of dollar bonds caused the bond-market selloff to intensify.

Shares of Modern Land have fallen more than 40% this year. Its dollar bonds due March 2024 crashed to 25 cents on the dollar as of last Friday, according to Tradeweb, down from 72 cents at the end of September.

On Monday, Modern Land said it wanted to delay repaying its $250 million of 12.85% bonds due on Oct. 25 by three months, though it plans to buy back 35% of the bonds on the original maturity date.

The delay is intended to improve liquidity, manage cash flows and “avoid any potential default under the notes,” Modern Land said. It is offering investors $1 for every $1,000 in face value of bonds they hold as a fee for consenting to the changes. It needs to secure at least 90% approval.

In a separate statement, Modern Land said its controlling shareholder, Chairman Zhang Lei, and President Zhang Peng would together provide a total of 800 million yuan, the equivalent of about $124 million, in shareholders’ loans within the next two to three months. The statement touted Zhang Lei’s “continuous commitment to the group and his unwavering confidence in the group’s businesses and development.”

Last week, Modern Land said its contracted sales for September of properties and car-parking spaces totaled about 3.56 billion yuan, or the equivalent of about $553 million. That was about 22% lower than the year-earlier period.

Write to P.R. Venkat at [email protected]