China Fortune Land Development Co (華夏幸福) said it has been unable to get hold of a money manager that it gave US$313 million for investment, casting a shadow over the profit outlook of the debt-laden developer.
Fortune Land has “lost contact” with China Create Capital Ltd (中創資本), a British Virgin Islands-registered firm to which it handed more than US$313 million in 2018 in hopes of receiving an annual return of 7 to 10 percent through next year, it said in a filing with the Shanghai bourse late on Wednesday.
The Beijing-based developer has reported the matter to the local police, it said, adding that it remains unclear how it would affect current and future earnings.
Photo: EPA-EFE
Fortune Land is among a growing list of Chinese developers that are embroiled in a debt crisis following Beijing’s deleveraging campaign aimed at defusing financial risks and making housing more affordable.
The company in March defaulted on a US$530 million bond, becoming China’s first real-estate firm to post a repayment failure since Beijing tightened controls of the debt-burdened sector last year.
Fortune Land said in the exchange filing that one of its offshore units in 2018 signed an agreement to entrust a company called Wingskengo Ltd to provide wealth management services for the developer, helping it buy fixed-income products.
As instructed by Wingskengo, Fortune Land transferred US$313 million to China Create Capital for wealth management, the filing said.
Fortune Land said it has booked the sum as part of its non-current financial assets, and the fair value has yet to be adjusted.
Shanghai-listed shares of Fortune Land were down slightly morning yesterday. Its US dollar bond prices have plunged since its default and are at distressed levels of about US$0.3 on the dollar, data compiled by Bloomberg showed.
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