(Bloomberg) -- Chinese distressed builders Logan Group Co. and KWG Group Holdings Ltd. are close to signing a private loan to refinance a HK$10.2 billion ($1.3 billion) facility that backed the development of a luxury property in Hong Kong, said people familiar with the matter.
The borrowing, arranged by JPMorgan Chase & Co., is likely to be signed with a group of investors by early next week, according to the people, who asked not to be named discussing private information. Singapore-based private equity firm RRJ Capital, American investment manager Pacific Investment Management Co. and Deutsche Bank AG are among the largest lenders in the loan, said the people.
The original HK$10.2 billion project loan for The Corniche is set to mature on Aug. 25, Bloomberg-compiled data show. The facility has around HK$8.6 billion in outstanding principal and interest, said one of the people. The developers have been seeking financing to fully cover the existing deal, but the new borrowing’s final amount hasn’t been decided yet, added the people.
The refinancing plan, if successful, could help clear a major obstacle to Logan’s $8 billion offshore debt restructuring. While this project loan isn’t included in the property firm’s restructuring, The Corniche has been at the center of the negotiation because a separate group of creditors are counting on the project’s income to make the debt plan viable.
Representatives at Deutsche Bank, JPM, Logan, Pimco and RRJ declined to comment. KWG didn’t immediately respond to an emailed request for comment.
Investors are targeting a 13% annualized yield for the new private deal, which has a tenor of 30 months and two six-month extension options, the people added.
The latest development also poses challenges for Ares Management Corp, the alternative investment manager that is vying for a piece of the HK$10.2 billion borrowing. It had offered to buy a majority stake of the syndicated facility at 95% of par from existing lenders, Bloomberg reported earlier.
--With assistance from Shen Hong.
©2024 Bloomberg L.P.
