Fantasia Vows ‘Vigorous’ Fight as Winding-Up Petition Filed

Fantasia Holdings Group said it will vigorously oppose a 24 May winding-up petition in the Cayman Islands over $149 million of outstanding loan facilities which has frozen its assets and brought a halt to a string of asset sales.

Flower SPV 4 Ltd., which filed the case before the Grand Court of the Cayman Islands, is calling for the appointment of joint liquidators for the Shenzhen-based developer, citing the property company’s inability to pay its debts.

“The company will seek legal advice and take all necessary actions to protect its legal rights,” Fantasia wrote in a 27 May filing, noting that it will also request a validation order from the court to prevent any activity involving its shares and other assets from being suspended or invalidated.

On 24 November, Fantasia’s Fantasia Investment Holdings subsidiary also faced a similar winding-up petition for a loan it guaranteed with an alleged outstanding principal of $149 million. Back then, the parent group indicated it will “take all necessary measures including maintaining a constructive dialogue with the petitioner to address the matter.” Fantasia representatives had yet to respond to requests for comment at the time of publication.

Knee-Deep in Debt

A mid-sized developer of luxury apartments in China, Fantasia ranked 64th among the country’s real estate companies in 2021, and in recent months has been on a selling spree as it attempts to address liquidity problems.

On 4 October, the company missed a deadline to repay the outstanding $205.7 million principal of a $500 million senior notes issuance. On the same date, a subsidiary also missed a RMB 700 million ($105.3 million) loan payment owed to Country Garden’s property services unit. These missed payments elicited a downgrade from Fitch Ratings, which also identified the property group’s shady bookkeeping as reason for its action.

With hopes of turning the tide on its debt situation, Fantasia on 29 January agreed to sell its entire 41 percent shareholding in an 81,827 square metre (880,778.5 square foot) mixed-use project in Chongqing with Yuexiu Group to a Guangzhou government-owned enterprise for RMB 200 million.

Then on 2 April the company struck a S$21 million ($15.4 million) agreement to sell its holdings in the Parkwood Collection residential development at Lorong 1 Realty Park in Singapore.

On 19 May, Fantasia also agreed to divest its remaining 51 percent stake in a 197,225 square metre residential development in Shaoxing to its partner on the project, state-owned CCCG Real Estate Group for RMB 760.6 million.

Hanging in the Balance

In the company’s filing for all the recent asset sales, it mentioned that the disposals are part of its strategy to ease its liquidity issues. However, as long as the winding-up petition is pending, all disposals by the Hong Kong-listed entity not finalised by 26 May will likely be invalidated, unless it can obtain an order from the court.

All assets directly held by Fantasia’s Hong Kong-listed entity are covered by the petition and will be frozen as long as no validation order is provided by the Grand Court. Meanwhile, assets held by its subsidiaries, such as those in Mainland China and the US, are excluded, it noted in a filing.

The company warned that in the event its request for a validation order is rejected and the winding-up petition is not dismissed or permanently stayed, all transfer of shares on or after 26 May will be void.

While the group is making concerted efforts to settle its financial obligations, it is also dealing with other concerns such as the late publication of its audited results for full-year 2021. Because of the delay, trading of the company’s shares in Hong Kong had been suspended since 1 April.

On 28 February, officials of the company and its property management spin-off Colour Life Services were called out and sanctioned by the Hong Kong exchange for crossovers between the property management services of the two entities.

The exchange found that, while Fantasia was to provide property management strictly for “pure commercial properties” and Colour Life was to handle such services for “pure residential communities” there were numerous instances of crossover since 2015.