The chairman of an acquisitive Chinese real estate conglomerate has landed on a national debtors blacklist that bars him from flying first class or going to nightclubs, as leverage pressures intensify for the country’s property sector in the wake of the coronavirus outbreak.
Huang Qisen, the founder and chairman of Tahoe Group, was added to the Supreme Court’s public database after failing to repay loans to a Chinese trust company. Moody’s said in March that the company had $4.3bn in short-term debts.
Tahoe went on a global buying spree in 2016 but has more recently become one of several highly indebted property developers flagged by the Financial Times for default risks on US dollar-denominated debts.
Home sales in China have plummeted during the Covid-19 outbreak that started in January, pinching cash flows for developers. By mid-April, the volume of new home sales in 30 major cities was still down by about 36 per cent year on year, according to data compiled by Nomura, a sign that the market was still far from a full recovery.
The crisis has pushed several developers closer to default this year. Real estate group China Yida Holdings, for example, failed to repay a US$52.8m bond last week, triggering a cross default.
Mr Huang’s addition to the national blacklist means he cannot stay in high-end hotels, visit golf courses or nightclubs and must ride economy class on flights. It also stops him from buying property, renting office space or apartments, going on holiday and sending his children to expensive private schools.
The company did not respond to a request for comment on its chairman’s addition to the blacklist and Mr Huang could not be reached.
Mr Huang founded Tahoe Group as a property developer in Fujian province in 1996 but has since transformed it into an international conglomerate with financial and medical holdings.
He was ranked 347th on the Forbes China Rich List in 2018 but dropped off the following year.
In 2016, Tahoe bought Hong Kong-based Dah Sing’s insurance business for about $1.4bn amid a wave of Chinese investments into Hong Kong’s insurance sector. In 2017, it bought Nasdaq-listed radiology specialist Alliance Healthcare Services and owns several hospitals across China.
The group has also purchased stakes in a number of financial companies, such as Dongxing Securities, Fujian Haixia Bank and Rural Credit Bank of Fuzhou. Mr Huang is executive chairman of Haixia Bank. Despite concerns over its high debt levels, Tahoe bought up several prime properties in Beijing in 2018.
Following the acquisition spree, analysts raised doubts over Tahoe’s ability to repay its debts.
The company had Rmb30.6bn ($4.3bn) in short-term debts at the end of September 2019, mainly linked to trust loans and onshore bonds, according to Moody’s, but insufficient funds to cover those debts.
“Moody’s expects that the company’s cash flow will weaken as a result of its contracted sales decline in 2020, driven by the weaker economic conditions caused by the coronavirus outbreak,” the rating agency said after downgrading Tahoe to Caa1, defined as “poor quality and very high credit risk”, in late March.