NWD (17 HK): The Strings Attached To Latest Debt Financing

• This "rescue package" announcement late last month came as no surprise, as the alternative situation (liquidation/bankruptcy) for New World Development (17 HK), and the ensuing optics were not great.

• Media reports are now coming in that NWD is reportedly seeking to sell - or accelerate the sale - of its real estate projects in China.

• That makes sense. The refinancing afforded NWD some breathing space. However, to strengthen/bolster its balance sheet, NWD needs to offload assets. Yet pinning down a "fair" valuation will take time.

The NEW News

• Reportedly NWD is seeking to sell its real estate projects in mainland China, including properties such as the K11 buildings in Hangzhou, Shenzhen and Shanghai.

  • The building in Shanghai alone is estimated to be worth HK$3.1bn.

  • As at FY24, NWD had ~HK$50bn of real estate investments in China.

• The purported asset sales are, not surprisingly, tied to the June refinancing agreement.

• NWD is reportedly seeking to raise a further US$2bn via new loans.

• NWD has been steadily offloading assets. The big one was selling its entire 60.85% stake in NWS on the 20 November 2023 for HK$21.7bn.

  • Last, November, Chow Tai Fook Enterprises, the Cheng family’s private holding company, acquired NWD's 75% stake in the Kai Tak Sports park for HK$416.7mn and took responsibility for a HK$679.9mn loan tied to the development.

  • In June 2024, NWD also sold its 30% stake in a Shenzhen office tower to Chow Tai Fook Enterprises for RMB1.44bn.