China Developer Sunac Raises $953 Million; Chairman Issues Loan

(Bloomberg) -- Sunac China Holdings Ltd. raised about $953 million through the sale of new shares as well as a stake in its property management unit, the latest Chinese developer to seek funds amid an industry-wide liquidity crunch.

Sunac said it sold 335 million shares at a price of HK$15.18 each, raising about $653 million, in a statement Sunday, confirming an earlier story by Bloomberg News. 

Another $300 million came from a sale of 158 million shares in its property management arm Sunac Services Holdings Ltd., via a subsidiary. Sunac Services shares were sold at HK$14.75, a discount of 11% to Friday’s closing price.

Sun Hongbin, the controlling shareholder of Sunac and the chairman of the board, also provided $450 million from his own funds in the form of an interest-free loan.  

China’s fourth-largest property company by sales has faced heightened market scrutiny over its financial health since a letter from a subsidiary to a local government seeking assistance surfaced in September. Sunac later denied requesting support. 

Debt woes at Chinese developers, including China Evergrande Group and Kaisa Group Holdings Ltd., have fueled investor concerns over the strength of even the nation’s biggest property firms. Soaring yields in the offshore bond market have made it tough for developers to roll over their debt, while falling home sales and prices have added to the gloom. 

Sunac is also planning to sell its vast culture and tourism business to raise cash, Bloomberg News reported on Friday. Property developers however have been struggling to offload assets as potential buyers in the sector hoard funds given falling home prices.

The Beijing-based developer met two of the “three red lines” metrics set by the Chinese government to cap leverage in the sector, with its 76% reading on liabilities to assets missing the 70% target. Companies have until mid-2023 to meet the guidelines. 

Morgan Stanley was the placing agent and joint bookrunner with Citigroup sole bookrunner.

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