Sinic Holdings Becomes First Chinese Developer to Delist During Real Estate Crisis

Sinic Holdings, a midsize builder and early defaulter during China’s ongoing real estate crisis, is set to be the first mainland developer to be stricken from the Hong Kong stock exchange during the current real estate crisis.

Sinic’s shares will be delisted from the exchange on 13 April after the company failed to meet bourse requirements for resumption of trading since transactions involving its stock had been suspended on 20 September 2021.

Under HKEX rules, the stock exchange had authority to delist the company if trading did not resume by 19 March 2023, the bourse said Thursday in a filing, with the Listing Committee having decided on 24 March to eject Sinic from the exchange.

“The exchange has requested the company to publish an announcement on the cancellation of its listing,” the HKEX said. “The exchange advises shareholders of the company who have any queries about the implications of the delisting to obtain appropriate professional advice.”

Dual Defaults

Trading in Sinic shares were first halted after an 87 percent price plunge in the company’s shares on 20 September 2021, following a default announcement. In order to resume trading, Sinic needed to demonstrate that it had complied with a stock exchange rule requiring a sufficient level of operations and assets of adequate value to be worthy of a spot on the bourse.

The company was also required to publish all outstanding financial results or audit modifications, as well as announcing all material information to the shareholders and resolution of any winding-up petitions against it.

By the 19 March deadline, Sinic had still failed to publish its 2021 annual earnings report, with the company also having been targeted with a winding-up petition in Hong Kong.

While not a delinquent on the same scale as fellow defaulters China Evergrande and Kaisa Holdings, Sinic stirred concern on 18 September 2021 when it revealed that certain subsidiaries had missed interest payments on onshore financing arrangements and enforcement action was being taken by one of its offshore creditors.

That $250 million default was followed by a second $250 million non-payment in January 2022. In all, Sinic has $694 million in dollar bonds outstanding, according to data compiled by Bloomberg.

The January bonds were delisted from the Hong Kong exchange at the maturity date, and trading of Sinic’s shares and debt securities on the exchange have remained suspended since that time.

Sinic chairman Zhang Yuanlin and his family reportedly hold more than 80 percent of the developer’s issued shares, which last traded at HK$0.50 apiece in 2021.

Winding-Up Woes

In December of last year, a Hong Kong court ordered the winding-up of Sinic Holdings after the company was sued in August over an offshore private bond.

Bank of New York Mellon’s London branch had filed the winding-up petition against Sinic, according to a court record seen by Bloomberg.

A lawyer for BNY Mellon told the case’s master during the hearing that Sinic no longer opposed the petition and that he demanded the immediate winding-up of the firm, Bloomberg reported.