Country Garden finds partner to fund completion of skyscraper in Guangzhou, shares soar
- Country Garden has been struggling to finish construction of a 64-storey commercial tower on a land parcel acquired in 2017, due to paucity of funds
- Guangdong Zhongwei’s cash injection will entitle it to 47.46 per cent of the completed units of the building
The announcement lifted the developer’s shares, which rose as much as 4 per cent on Monday, outperforming the market benchmark’s 0.7 per cent gain, although analysts were less than impressed, saying challenges abounded for the embattled company.
The partnership between Country Garden’s unit Guangzhou Xingchengsi and Guangdong Zhongwei, which is engaged in the business of supply chain, science and technology promotion and application services, will bridge the financing gap by providing 2.8 billion yuan (US$384 million) for the project located in what is billed as Guangzhou’s second business district. Guangdong Zhongwei’s cash injection will entitle it to 47.46 per cent of the completed units of the building.
“The introduction of Guangdong Zhongwei as a partner for the joint development of the Guangzhou property will be a timely and much-needed solution to the difficulties faced by the Group in realising the Guangzhou property, ” the Foshan-based Country Garden, once China’s largest home builder by sales, said in a stock exchange filing on Sunday.
The project is hindered by various complexities, according to the developer’s filing. The property is mortgaged as security for notes due next year worth 1.7 billion yuan while one of the unit’s shareholders is also faced with a freeze order, resulting in difficulties raising funds.
