Goldin Struggles to Pay HK$10.3B in Debts as Headquarters Seized by Creditors

Trading in shares of Goldin Financial Holdings remained suspended on the Hong Kong exchange today as the real estate and investment firm controlled by mainland tycoon Pan Sutong struggles to raise funds after having its corporate headquarters taken over by creditors seeking repayment of $494.5 million in debts.

In a statement to the Hong Kong exchange on Thursday, Goldin Financial notified investors that it was in discussions with its creditors in the city and was in the process of arranging HK$8.7 billion ($1.12 billion) in new credit to help meet its financial obligations, as well as moving forward with an earlier announced plan to sell a Kai Tak plot for HK$7.04 billion.

The company’s statement, which came after it had been sued last month by one of China’s largest asset manager’s seeking payment on other debts, revealed that Goldin, which had current liabilities of HK$11.9 billion at the end of 2019 according to its annual report, is currently attempting to repay nearly HK$10.3 billion in obligations being sought by its creditors in Hong Kong.

Soon after Goldin filed its explanation of its financial troubles on Thursday, the company’s shares began trading again, losing nearly 12 percent of their value that day to close at HK$0.99 per share before activity was halted again on Friday morning. Since that time, Goldin has remained quiet on the prospects for its finances and its plans for any resolution while its stock stays frozen.

Hong Kong Headquarters Drama

The chill on Goldin’s finances had turned arctic on Tuesday last week when local media recounted reports of tenants at Goldin Financial Global Center, the developer’s 900,000 square foot (83,612 square metre) headquarters in Kowloon Bay receiving notices from receivers appointed by the firm’s creditors to direct rent payments to the receiver rather than to the landlord.

In its statement on Thursday, Goldin identified the receivers as Cosimo Borrelli and Simon Ma Siu Ming, names which match with the identities of senior executives of Borrelli Walsh, an Asia-based corporate restructuring firm.

The receivers are said by Goldin to have been appointed by the security trustee for HK$6.8 billion for senior notes issued by a subsidiary of the company in April of last year and secured by a trust deed on the Goldin Financial Global Center. The relationship between the senior notes and Goldin’s corporate headquarters is substantiated by documents filed with Hong Kong’s Land Registry on 10 April last year with Deutsche Bank affiliate DB Trustees (Hong Kong) Ltd acting as trustee.

Goldin had arranged the notes just one month before it won a government auction of a Kai Tak commercial site with a record HK$11.1 billion bid and six months after it had won an earlier Lands Department tender for a residential site on the former airport site with a HK$8.9 billion bid.

Goldin forfeited its commercial site in June of 2019 and in May this year agreed to sell its residential site at a HK$2.6 billion loss.

In addition to its default on the senior notes, Goldin said in its announcement on Tuesday that it is seeking to repay creditors on a HK$3.8 billion dual-tranche loan arranged by Deutsche Bank owed by two separate subsidiaries of the company.

Goldin acknowledged that its subsidiaries had received a letter from Deutsche Bank demanding immediate payment of the principal and interest on the loan totalling just under HK$3.5 billion.

Hong Kong Troubles Follow Mainland Lawsuit

Goldin Financial’s troubles in Hong Kong came just less than one month after Goldin Properties, a mainland developer controlled by Pan Sutong, along with other entities controlled by the tycoon was sued by China Cinda Asset Management over a RMB 1.5 billion default on financing for a development project in Tianjin.

In a statement to the Hong Kong stock exchange on 12 June, China Cinda, which is one of the mainland’s four major bad asset banks, said that Goldin Properties and Pan Sutong had failed to repay principal and interest on financing for the Goldin Metropolitan Central Business District, a 1.1 million square metre mixed-use project in the port city east of Beijing.

China Cinda said that it had sued Goldin and Pan in the relevant mainland court, seeking repayment of RMB 1.5 billion in principal, as well as interest and penalties, after the developer and its backers had failed to fulfill the terms of the three-year financing package within the agreed time. The original funding had been agreed to on 1 March 2016 and China Cinda said that its case had been accepted by the court.

Originally scheduled for completion by the end of 2017, the RMB 18 billion Goldin Metropolitan Central Business District, which includes the 128-storey Goldin Finance 117 supertall skyscraper, remains unfinished.