Country Garden starts "second entrepreneurship"

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

On December 4th, as the gavel of the Hong Kong High Court came down, one of the largest debt restructuring cases in China's real estate industry finally reached its breakthrough moment.

On that day, Country Garden's offshore debt restructuring plan, amounting to approximately $17.7 billion, was officially approved. Just the day before, the last of the nine bonds involved in its domestic debt restructuring also received creditor approval.

Thus, this once industry giant, after 329 days and nights of extreme negotiation and difficult challenges, finally navigated through the eye of the storm.

This victory does not belong solely to Country Garden. It is a shout from the leading forces of private real estate enterprises, after experiencing desperate self-rescue efforts: we are alive, and we will live with dignity; this path is feasible.

Represented by Country Garden, real estate companies are also seeking survival from the liquidity crisis, shifting towards self-sustaining growth, and truly gearing up to embrace a new phase.

In the past 329 days, Country Garden faced an extremely complex battlefield. With $17.7 billion in offshore debt and 9 domestic debts totaling 13.77 billion yuan, there were countless differing interests among creditors.

As an analyst stated, debt restructuring is a zero-sum game and a trial. If consensus cannot be reached within a controllable timeframe, the confidence of the enterprise will be exhausted, and operations will come to a halt.

Country Garden achieved this. In this thrilling leap, it not only outpaced time but also regained trust.

This is a highly technical and sincere systemic reconstruction. According to estimates, with the successful synergy of domestic and offshore restructuring, Country Garden is expected to reduce its overall debt scale by more than 90 billion yuan.

By converting short-term repayment pressure into long-term equity value, Country Garden successfully utilized the financial tool of "debt-for-equity swaps" to the fullest. After the restructuring, the financing costs of most new debt instruments were reduced to 1%-2.5%, saving the company a significant amount in interest expenses. At the same time, it is expected to recognize over 70 billion yuan in restructuring gains, significantly strengthening net assets and providing a safety cushion for its originally fragile balance sheet.

In the game of debt restructuring, the reason Country Garden was able to win over more than 99% of creditor votes lies in its ability to maintain the anchor of trust.

Under the extreme pressure of a tight cash flow, Country Garden always regarded "ensuring housing delivery" as the ballast of corporate credit. Meanwhile, the controlling shareholder Yang Huiyan's family provided substantial support—ranging from approximately HKD 3 billion in cash support to leading the conversion of $1.148 billion in shareholder loans into equity, demonstrating a commitment to stand together with the enterprise through real financial investment.

As Yang Huiyan repeatedly emphasized in internal meetings: "The more difficult the environment, the more we must show our responsibility." This stance became the most weighty bargaining chip at the negotiation table.

With the debt crisis resolved, Country Garden quickly launched its second battle of "promoting strategic implementation through organizational change." Notably, at the same time the restructuring was approved, Country Garden not only proposed a "second entrepreneurship" strategically but also undertook significant restructuring in its organizational structure and management division.

On December 4th, Country Garden announced that Mo Bin was reassigned from president to co-chairman, focusing on building external strategic relationships and resource integration; Dr. Cheng Guangyu, the former executive vice president, was promoted to president, overseeing the group's business segments and daily operations Sources close to Country Garden indicated that the recent adjustment in the management structure aims to further clarify the boundaries of governance responsibilities, strengthen the collaborative efficiency of the core management team, promote the organic integration and orderly operation of the management system, and further consolidate the solid foundation for the current management system to continuously empower the group's high-quality development.

On December 3rd, just one day before the restructuring was approved, Country Garden initiated a new round of organizational restructuring, merging the original 13 real estate regions down to 10. This organizational adaptation is based on changes in business scale against the backdrop of the industry entering a new normal.

By promoting management flattening, Country Garden aims to build a more efficient and agile organizational form to ensure the precise implementation of the "good house" strategy.

In this regard, Yang Huiyan has a clear understanding. She first proposed the concept of "second entrepreneurship" at the management meeting in November. This indicates that in the future, Country Garden will shift from a scale-oriented approach to a quality-oriented approach, moving from rapid expansion to meticulous cultivation.

Country Garden has already laid the groundwork on this new path.

Its subsidiary, Tengyue Construction Technology, has developed 28 types of commercial robots, delivering over 4,600 units; while Fenghuang Zhituo, which manages construction, has managed nearly 20 million square meters, outputting management dividends through a light asset model. These once "idle pieces" are now becoming key forces to navigate through cycles.

The victory and restructuring on December 4th mark a coming-of-age ceremony for Country Garden and serve as a microcosm of the Chinese real estate industry.

It tells us that in this era full of uncertainties, only those enterprises that dare to face crises, are willing to take responsibility, and actively seek change can weather the storm and reach the other shore.

Of course, financial cleanup is just the first step of a long journey. The reduction of approximately 90 billion yuan in debt has repaired the balance sheet on paper, but to truly restore the cash flow statement, the company needs to continue to exert efforts at the operational level.

Country Garden has passed the most difficult hurdle, but the road ahead remains long. However, when a company can pull itself out of the quagmire of hundreds of billions in debt and still deliver 1.8 million homes even in the toughest times, there is reason to believe it possesses the resilience to navigate through cycles.

Because in this long process of self-rescue, it has not only repaired its balance sheet but also restored the courage and confidence to face the future. The rebirth of the industry begins here