Billionaire Sun Hongbin’s Sunac Delays Financial Results, Will Suspend Share Trading

Sunac, the Hong Kong-listed real estate developer headed by billionaire Sun Hongbin, says the company can’t publish 2021 unaudited annual results on time and it will suspend trading of shares on April 1, according to a Monday stock exchange filing.

The troubled builder joins a wave of struggling property firms – including Sinic, China Evergrande, Kaisa Group and Shimao Group – in delaying their financial reports. Sunac cited this time reasons such as issues related to offshore loans and proposed extension of certain onshore bonds, after first warning of a delay last week. The company said then it couldn’t publish audited annual results on time due to Covid-19 related restrictions, which it said postpone on-site interviews and document checks.

Shares of the company tanked almost 20% on Tuesday, as investors rushed for an exit. Similar to many of its peers, Sunac is struggling with waning access to liquidity and big piles of debt racked up during previous years’ rapid expansion.

The company is negotiating with creditors and seeking to extend its 4.75% 4 billion yuan ($627.4 million) and 7% 2 billion yuan ($313.7 billion) onshore bonds due this April. One preliminary plan involves the billionaire offering unlimited joint liability guarantee, according to a filing made to the Shanghai Stock Exchange. His current $2.4 billion fortune is largely based on a 45% ownership in Sunac, whose shares have lost almost 90% of value during the past 12 months.

The company, in fact, has a total of $2.7 billion in onshore and offshore bonds due this year, according to Fitch Ratings. The agency downgraded the developer for a second time in March, citing reasons including limited funding access and “significant acceleration” of offshore debt payment.

“We believe Sunac is unable to access the onshore and offshore capital markets, but is depending on internal cash resources, contracted sales proceeds and large asset disposals to address its 2022 debt maturities,” Fitch wrote.

But the company issued its own profit warning in January, warning investors that profit for 2021 would plunge by 85% due to investment losses and sales declines. It said in the same month contracted sales stood at $4.4 billion in January, an 8% decrease from $5.5 billion in contracted sales recorded a year ago.