Country Garden’s Yang Huiyan Sees Wealth Slide Amid Debt Crisis

This story is part of Forbes’ coverage of China’s Richest 2023. See the full list here.

Yang Huiyan, chairperson of property developer Country Garden and once the richest woman in Asia, slipped 24 spots to No. 93 as the company defaulted for the first time in mid-October on a dollar bond interest repayment. The wealth that she shares with her family plummeted almost 90% to $3.6 billion over two years as the debt crisis engulfed the Hong Kong-listed firm amid a prolonged slump in the country’s property market. A Country Garden spokesperson says the company has no comment.

Earlier that month, the developer warned it wouldn’t be able to meet all of its offshore payment obligations, citing “significant challenges” to sales in a filing to the Hong Kong Stock Exchange. With $188 billion in total liabilities, of which an estimated $17 billion are offshore, the company said in the filing it hired advisors to evaluate its liquidity and capital structure.

Warut Promboon, a Hong Kong-based managing partner at research firm Bondcritic, says offshore bondholders in distressed firms like Country Garden typically get 15% of their investment back at best, with other debt obligations, such as paying off suppliers, taxes and other forms of secured debt, taking priority. Investors will get even less than that—with the recovery rate in single digits—if they resort to liquidating the company, according to one analysis done on the company’s balance sheet. The spokesperson didn’t respond to questions on restructuring.

It is now up to the 42-year-old Yang to steer Country Garden through its crisis. In March she officially took over from her father, Yeung Kwok Keung, who transferred his majority stake in the company to Yang in 2007. Country Garden gained some breathing room in September, when it won bondholder approval to extend payments on 14.7 billion yuan worth of onshore bonds by three years.

It is now up to the 42-year-old Yang to steer Country Garden through its crisis. In March she officially took over from her father, Yeung Kwok Keung.

The family, in the meantime, is using their personal wealth to support Country Garden. The father and daughter made an interest-free loan of $300 million to the company and are selling their private jets to boost its cash flow, according to state-affiliated news outlet Cailian.

After stepping down as co-chair, the elder Yeung made his first public appearance in October, visiting a construction site in Foshan, where the company is headquartered. In a separate public statement, Country Garden said the founding family is in China and working as usual, dismissing social media reports that they had fled the country as rumored.

But reinvigorating the overall business will be a challenge. Amid China’s property downturn, which has shown little sign of improvement despite a raft of recent government support measures, the company’s contracted sales are projected to almost halve to 180 billion yuan this year from 2022, according to a September research report from Moody’s Investors Service. About two-thirds of Country Garden’s residential projects are located in townships and smaller cities, where property prices have been weaker.

“Its contracted sales could decline further in 2024 if the company is unable to improve its financial position and restore market confidence,” Moody’s writes. “Furthermore, the company’s ability to increase its coverage in high-tier cities is limited given its deteriorated financial and liquidity positions.” Elsewhere, questions have been raised over the slow pace of development of Forest City, a $100 billion property project that Country Garden committed to build in Malaysia, according to media reports. The company has said it’s progressing as planned.