China court orders developer SRE to sell majority stake in Shanghai venture to repay loans
The action comes after units of SRE failed to pay 4.45 billion yuan (US$627 million) in debts, the company said in a Hong Kong filing
A Shanghai court has ordered Chinese developer SRE Group to sell its majority interest in a joint-venture company after SRE failed to repay 4.45 billion yuan (US$627 million) of bank loans, the company said in a filing with the Hong Kong stock exchange.
SRE, a unit of embattled conglomerate China Minsheng Investment Group, said four units that collectively held 51 per cent of Shanghai Jinxin were unable to fulfil their obligations under a court order to pay the loans. They were also ordered to separately pay 4.52 million yuan of “enforcement fee” by the court.
The loan originated from a 5 billion yuan syndication arranged by Industrial & Commercial Bank, Agricultural Bank of China, China Construction Bank and Shanghai Pudong Development Bank. The borrowers have failed to service the loan since March 2022, according to the filing.
The order issued by the Shanghai Financial Court represents yet another judicial intervention sought by creditors as more distressed mainland home builders struggled to sell homes and meet their repayment schedules.
SRE is “currently liaising and negotiating with the lenders and seeking legal advice to [minimise] any legal implications and/or consequences”, it said in its disclosure on Thursday.
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Shanghai Jinxin’s main business is the development of the Shanghai Daxing Road project in the city’s Huangpu district. The plan for the parcel, which covers 37,129 square metres (about 400,000 sq ft), includes luxury flats and commercial properties. Pre-sale approval for the project was expected in 2026, SRE said in a filing in April.
