Chinese developer Shimao Group said yesterday China Construction Bank (Asia) had filed a liquidation petition against it in Hong Kong over unpaid debts, a rare case of a state-owned bank taking such legal action in the property downturn.
The petition centres on Shimao’s failure to repay loans of HK$1.58 billion ($201.75 million) and contrasts with legal processes against rival firms such as China Evergrande Group and Country Garden for defaulting on their debts that were launched by overseas-based creditors.
The loans include direct lending from China Construction Bank (CCB) to Shimao and the bank’s participation in syndicated loans from a club of lenders to the developer, according to a source with direct knowledge of the matter who could not be named because the information is confidential.
CCB did not respond to a request for comment on the petition or the composition of its loans to Shimao.
Shimao’s Hong Kong-listed shares ended down 18.7 per cent at HK$0.37, a record low. The Hang Seng Mainland Properties Index was down 0.2pc.
Shimao said in a stock exchange filing it would “vigorously” oppose the lawsuit and press on with a plan to restructure about $11.7bn of offshore debt, with an aim of cutting it by 60pc.
“The company is of the view that the Petition does not represent collective interests of the company’s offshore creditors and other stakeholders,” Shimao said in the filing.