(Yicai) July 4 -- China Vanke’s largest shareholder Shenzhen Metro Group has agreed to grant another CNY6.25 billion (USD872 million) loan, its sixth in six months, to the embattled real estate giant and to extend the term on an existing CNY890 million (USD124.24 million) loan to help the developer manage its mounting debt repayments.

The new CNY6.25 billion loan, which is on top of CNY15.5 billion (USD2.2 billion) that Shenzhen Metro has already lent to Vanke, will be used to repay the principal and interest on the bonds owed by Vanke in the open market, the Shenzhen-based developer said yesterday.

The loan has a three-year term, but Vanke can repay it early if both sides agree, it said. Shenzhen Metro can also opt to extend the loan further. The interest rate on the loan is a modest 2.34 percent.

In addition, Shenzhen Metro has agreed to extend the May 18 deadline on another loan of CNY890 million to Dec. 31, Vanke said.

As part of the current round of negotiations, Vanke has pledged shares worth not less than CNY2.2 billion (USD310 million) in its property services unit Onewo Space-Tech Service as collateral for an unsecured CNY1.5 billion (USD209.4 million) loan that it borrowed from Shenzhen Metro on May 14. The loan-to-value ratio is 70 percent, much higher than the market norm of between 30 percent and 60 percent.

These loans and extensions will help Vanke meet its public bond obligations, it said. The interest rates are lower than what the banks are currently offering, and the high collateral ratio on the CNY1.55 billion loan reflects Shenzhen Metro’s strong support for the company.

Vanke [SHE:000002] closed down 0.3 percent at CNY6.44 (USD0.90) today.

Editor: Kim Taylor