Fantasia Close to Selling Minority Stake in Qingdao Project; Disposal Will Raise RMB 1B to Help Cover Upcoming Offshore Bond Maturities

Fantasia Holdings is close to selling a minority stake in a property project in Qingdao with a site area of 2800 hectares to raise about RMB 1 billion ($154.3 million) after deducting the associated liabilities, said two sources familiar with the matter.

The Hong Kong-listed, Shenzhen-based property developer holds a 65% stake in the project and plans to sell about half of its stake, the sources added.

Management of the company guided on an investor call in June that proceeds from the sale of this project will be used to cover its upcoming offshore maturities, including two senior notes totalling $450 million due in December.

The company also planned to sell an urban renewal development in Beijing worth RMB 2 billion to RMB 3 billion and it will raise about $200 million for the company. The buyer of the Beijing project is a state-owned enterprise and the expected date of closing the deal is in July to August.

It announced on Aug. 13 that it had purchased $2 million of its outstanding senior notes in the open market, including $1 million of its $311.1 million 9.875% due Oct. 19, 2023s and $1 million of its $237.1 million 10.875% due March 2, 2024s. Further repurchases will be made based on the market conditions.

Fitch Ratings lowered its outlook on Fantasia’s B+ rating from stable to negative last month citing its increased leverage and decrease in its implied cash collection rate although the rating agency said it believed Fantasia has sufficient liquidity and a feasible plan to address its senior notes due in 2021.

The capital structure of Fantasia is below: