(Oct 1): New World Development Co said it has the financial support of the billionaire Cheng family after a massive writedown on a Hong Kong airport complex led to a record US$3.6 billion (RM14.71 billion) loss for the fiscal year.
Chow Tai Fook Enterprises Ltd, the largest shareholder of the embattled Hong Kong developer, has indicated it’s prepared to provide backing to the company, according to a filing on Wednesday. The pledge of support, though vague, confirms investor expectations that the family behind New World would back the firm.
New World posted an HK$18.3 billion (US$2.3 billion or RM9.53 billion) writedown after scrapping a deal with the Hong Kong airport to manage the struggling 11 Skies retail and office complex. The developer will pay HK$3 billion to the Airport Authority as part of the early termination agreement, while handing over three office towers and an entertainment venue at 11 Skies in April, the authority said in a separate statement.
The HK$28.1 billion loss for the property developer, pushed to the brink by a debt crisis in 2025, caps another turbulent year as it struggles to offload assets and secure fresh liquidity. A heavy debt burden and sluggish asset sales have intensified pressure on it to repair its balance sheet.
Exiting the 11 Skies deal is credit positive because it removes a long-term lease obligation, Bloomberg Intelligence analysts Daniel Fan and Hui Yen Tay said in a note.
New World was expected to pay rent on 11 Skies of at least HK$1.8 billion per year from 2028 through 2066, according to previous estimates from UBS Group AG.
New World’s chief executive officer Echo Huang told analysts on a conference call that the firm’s focus was now on optimising its balance sheet, doubling down on a focus to pare debt and sell assets.
The builder has made many attempts to cut debt over the past year, including a US$4 billion deal with Blackstone Inc that was ultimately scrapped over control issues. It’s in talks to sell its 50% stake in the Hyatt Regency hotel in Kowloon, people familiar with the matter said last week.
New World’s shares are down 17% this year versus a 4% decline in the Hang Seng Index. Hong Kong markets are closed on Thursday for a public holiday.
The firm is spinning off a Shanghai project through a commercial real estate investment trust in mainland China, which could provide 3.24 billion yuan (US$483 million or RM1.97 billion) in net proceeds.
“The REIT alone is unlikely to materially change New World’s leverage profile, but we view it as an important first step in its broader balance-sheet repair,” Barclays plc analyst Wilson Ho wrote in a report this month.
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