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Agile Property in talks with banks to extend loan
Chinese developer's shares fall as much as 31% after trading resumes; will consider other funding options

14 Oct5:50 AM
Hong Kong

CHINESE developer Agile Property Holdings Ltd, battling an industry slowdown and media speculation about ties to China's former security chief, said that it was in talks with banks about extending what remains of a US$475 million loan due in December.

Shares in the company, which is valued at around US$2.1 billion, dropped by as much as 31 per cent, the most on record, to HK$3.30 on Monday as they resumed trading after a week's halt. The company last week scrapped a proposed US$360 million rights issue - which would have gone towards repaying the loan - and said that its billionaire founder and chairman Chen Zhou Lin had been detained.

Agile said that Mr Chen - whose family wealth of US$3.2 billion was ranked 51st in China on the 2014 Hurun Rich list - had been required by the prosecutor in Kunming City in south-east China to stay at "a designated residence" since Sept 30.

Chinese property companies face tight credit and excess supply as growth in the world's second-largest economy slows. Weaker sales have choked liquidity at some property developers, pushing them to look for fresh sources of funding.

On a call with analysts on Monday, Agile said that it was in talks with banks including HSBC Holdings, Standard Chartered and Hang Seng Bank about extending the loan.

Agile, which is currently being run by Mr Chen's wife and another relative, said that it would consider other funding options including another try at a rights offer, other forms of equity financing or commercial property sales. "Shareholders' commitment will be ready within one or two days. So you can rest assured the committed shareholders will continue to support the company. Financially they're very sound, so don't worry," chief financial officer Sam Cheung said on the call.

Agile has not said why Mr Chen was detained, but noted on Monday's call that three plots of land it bought in Yunnan province - part of a three billion yuan (S$620 million) investment - were acquired through "proper auctions". Kunming is the Yunnan provincial capital.

In a statement early last week, Agile said that online allegations linking the company with Zhou Yongkang, the country's former domestic security chief and the highest-profile figure caught up in Beijing's crackdown on corruption, were "entirely groundless and totally fabricated".

Agile's bond yields jumped last week amid the speculation as to why the company halted trading in its shares. Agile has over US$2 billion worth of bonds outstanding, and liquidity risks have been elevated since its first-half accounts showed short-term debt of 14.7 billion yuan was far in excess of the 1.3 billion yuan it had as a free-to-use cash balance on June 30.

The bonds now yield 15-20 per cent, up from 7-9 per cent a week ago, according to data from Tradeweb.

Agile's 8.25 per cent perpetual bond currently trades at 68/70 cents on the dollar, down from 84/85 over the week and 90 in August.

On Monday, Agile said the news of its chairman's detention had not impacted its business, and it recorded sales of more than two billion yuan during the Golden Week holiday period.

Helped in part by what came out of the analysts' call, Agile shares reversed some of their losses to close 17.2 per cent lower at HK$3.95. REUTERS
Agile - only the worst of the best
John Foley
14 Oct5:50 AM

AGILE Property is crumbling. The Chinese real estate developer needs urgent financial assistance after the authorities detained its chairman and it had to cancel a US$360 million rights issue. The shares fell by as much as 30 percent on Monday. Yet in China's property sector, it is just the worst of the best.

Chinese developers' most vital asset isn't land but cash. They tend to sell projects up-front, and then use the proceeds to pay for construction. But most borrow to buy new plots. Agile's land bank for future projects has expanded by 20 percent over two years. Its borrowings, including a US$475 million loan due to HSBC and Standard Chartered by the end of this year, have increased by 53 per cent over the same period. As a result, Agile's EBITDA in the twelve months to June was just 2.7 times its interest payments, according to Moody's, compared with 3.5 times in 2013.

When the market is weak, developers can only keep cash flow up by cutting prices. That's now happening nationally. Agile's average sales price per square metre between January and September was 20 per cent lower than a year earlier. To avoid spooking existing homeowners, developers across China are dangling deals that deliver lower real prices without changing the headline per-square metre price. Buy a flat and get a free balcony!

Even for those developers with cash, problems can develop rapidly. Agile has net debt of around 37 billion yuan (S$1.27 billion), just under four times its projected ebitda for 2014, according to Eikon estimates. It has the same amount again earmarked for tax payments, land purchases and building costs on its projects. A detained chairman might not bother homebuyers, but could deter banks and investors from offering more without very favourable terms.

Bad as Agile's predicament is, the real danger lies beneath ground level. China has thousands of developers, most of whom have no access to bank lending or international capital markets. Added together, the top ten players account for just 10 per cent of the floor space sold per year. If smaller developers exacerbate the pressure on their bigger peers by slashing prices, it won't just be Agile that feels fragile.
China's Agile shrinks rights issue, says director missing

Slashes new rights issue size to $213 mln from $360 mln

* Founder's family trustee to be new underwriter

* Exec director in charge of Yunnan province projects missing

* New rights issue a vote of confidence - analyst

* Company may see more downgrade pressure - S&P (Adds analyst and S&P comments, background)

By Clare Jim and Umesh Desai

HONG KONG, Oct 16 (Reuters) - Struggling Chinese developer Agile Property Holdings Ltd, whose billionaire founder was detained last month, said one of its executives had disappeared as it announced fresh plans for a life-saving capital increase.

The company, saddled with debt and slumping margins amid China's economic slowdown, said it now planned a rights issue to raise HK$1.65 billion ($213 million), much less than the HK$2.79 billion it proposed to raise in September.

Top Coast Investment Limited, the trustee of the founder's family trust, will underwrite the issue as opposed to HSBC , Standard Chartered and BNP Paribas in the previous plan, it said.

If minority shareholders did not take up any of the offer, Agile said the controlling Chen family and company directors would increase their stake to 68 percent from 64 percent, in what some analysts saw as a sign of confidence in the firm's future.

"We view the rights issue as marginally credit positive, as an equity undertaking instead of a shareholder loan shows a vote of confidence from the management," said Agnes Wong, a Hong Kong-based credit analyst with Nomura.

Agile shares were down 2.2 percent at HK$4.07 by 0410 GMT, their lowest since April 2009, compared with a 0.5 percent fall on the Hang Seng Index. Agile bonds rebounded, with the 2017s now trading at 91.5/93, a four-point recovery.

Chinese developers are under intense pressure due to the slowing real estate industry in the world's second-largest economy, with tight credit and excess supply forcing many to sell stock cheaply to raise cash.

Agile's problems have been exacerbated by the mysterious detention last month of founder and chairman Chen Zhou Lin, whose family wealth of $3.2 billion was ranked 51st in China on the 2014 Hurun Rich list. Agile has not said why Chen was detained.

Those concerns only deepened on Thursday when the $1.8 billion company said an executive director responsible for overseeing projects in Yunnan and Hainan provinces was missing, after Communist Party officials made inquiries about a subsidiary, Tengchong Agile Resort Co. Ltd.

The missing director and officials from the Central Commission for Discipline Inspection contacted Tengchong Agile Resort on Saturday seeking details on its land acquisitions, developments and sales.

Agile said in a statement that neither it nor the missing director's family had received any legal documents from authorities related to any investigation.

It is unclear whether the director was being detained or was on the run, or whether the company was being targeted over any alleged wrongdoing.

Another subsidiary of Agile, Tengchong Agile Property, was fined in May for illegal construction of a golf course on farmland. Tengchong is a county in Yunnan province.

Read more here
Is this a good time to buy a property from Agile ? They are based in Guangdong about one hour train ride, north of Macao.
Might as well buy Macau developers.

Sent from my iPhone using Tapatalk
The Company's advertisement offers new 100 sq m flat priced from RMB 0.5Mil .

This price level is not enough to cover the 30% deposit for buying small flat from Macau developers.