(Yicai Global) Nov. 4 -- Tahoe Group was granted a lifeline of over CNY900 million (USD124 million) from Chinese local governments last month to ensure the on-time delivery of pre-sold property and it is applying for another CNY750 million, the beleaguered private Chinese real estate developer said today.

The municipal governments in Shanghai, Xiamen in southeastern Fujian province as well as Guangzhou and Shenzhen in southern Guangdong province have allocated funds to rescue Tahoe’s housing projects in the cities, Tahoe said. Most of the money will be transferred to specific accounts opened by the local governments and will be used solely for the construction of these projects.

‘Guaranteeing the delivery of houses’ was set as a key task by the central government in July after a public uproar when many homeowners refused to keep paying their mortgages as cash-strapped developers kept pushing back the handover dates. Since then a number of assistance measures have been rolled out such as issuing loans for mergers and acquisitions, allowing asset management companies to take part in project restructuring and encouraging local governments to form bailout funds.

Two of Tahoe’s projects in a city in southern China were added to a list of policy-based loans after the company spoke with some government agencies, the Fuzhou, Guangdong province-based company said. Another project in Shanghai has secured a mortgage.

Local governments can also help through ‘group buying.’ For instance, one city organized the bulk buy of state-subsidized apartments that the firm was building to help raise funds. This is even though Tahoe is most known for its luxury developments and rarely builds government-subsidized housing.

Tahoe, which used to have a turnover of over CNY100 billion (USD15.4 billion) a year, got into trouble in 2020 when a subsidiary defaulted on CNY800 million in debt that Tahoe and a major shareholder Huang Qisen had acted as guarantors for. This was followed by huge projects grinding to a standstill during the pandemic that were then abandoned one after another.

The firm’s losses widened more than four-fold in the first three quarters to CNY3.1 billion (USD426.5 million), although revenue was up more than three-fold to CNY5.3 billion (USD728.3 million).

The company’s net cash flow doubled over the period to CNY115 million (USD15.8 million) and it paid off debts of CNY872 million in cash. As of Sept. 30 Tahoe still had debts of CNY47.7 billion (USD6.5 billion) due within the next year and long-term loans of CNY35.6 billion.

Tahoe’s share price [SHE:000732] closed up 4.2 percent at CNY0.98 (USD0.13) today. The stock has halved in value so far this year.

Editor: Kim Taylor