Chinese Firms Seek to Delay Loan Payments

China’s largest joint-venture property investment, the China World Trade Center in Beijing, wants to reschedule its $280-million loan, a senior banking source said. He added, however, that a formal plan had not yet been drafted.

The China World Trade Center, a business-residential complex that will eventually include a hotel, is a joint venture between Kerry Industrial Co., controlled by Singapore’s Kuok family, and three Chinese state-owned enterprises.

“Up to now, only a few office spaces and apartments have been leased out. Many leaseholders terminated their contracts on the grounds of delay after June 4,” the banker said.

The company managing the complex has slashed rents, and it plans to delay the opening of the hotel to keep costs down, the banker added.

China’s hotel business has been particularly hard-hit by the sharp drop in foreign tourists since the violence in Tian An Men Square. The head of the China department at a leading European bank said many loans for hotels in tourist spots, such as Guilin, Xian and Guangzhou, would be rescheduled, but he would not give details.

According to an official at an Australian bank, the Hilton Hotel in Shanghai and the Garden Hotel in Guangzhou are seeking to reschedule. “Their business dropped sharply after June 4 and they couldn’t keep up their payments,” he said.

The Shanghai Exhibition Center, a prime project in which $175 million has been invested, is asking for a year’s postponement before it has to start repaying a $145-million syndicated loan.

One of the bankers involved in the project said construction work on the hotel, office and apartment complex had been delayed by almost a year.

“The lenders and borrowers are facing a deadlock,” the banker said. “The foreign partners declined to inject more shareholders’ funds into the project. But the creditor banks have refused to reschedule the loan unless the partners put in more money to show their commitment.”