New World took a HK$18.3 billion charge after pulling out of a plan to operate retail and office space at Hong Kong's 11 Skies, which contributed to a fiscal-year loss of about $3.6 billion. In a filing, Chow Tai Fook Enterprises Ltd. - the biggest shareholder tied to the billionaire Cheng family - indicated it is prepared to provide backing. The commitment lacked specifics but effectively confirmed expectations that the family would stand behind the company.
Under an early termination agreement, the Airport Authority said New World will pay HK$3 billion.
New World posted a HK$28.1 billion loss, pushed to the brink by a 2025 debt crisis, with a heavy debt load and sluggish disposals increasing the urgency to fix the balance sheet. UBS previously estimated the developer was due to pay at least HK$1.8 billion a year in rent on 11 Skies from 2028 through 2066. Shares have tumbled amid mounting leverage fears.
The company has chased multiple deleveraging options. Talks for a $4 billion transaction with Blackstone Inc. fell through because of control terms, and New World is negotiating to divest its 50% interest in the Hyatt Regency hotel in Kowloon, according to people familiar with the matter.
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Echo Huang, the Chief Executive Officer, informed analysts that the company is focusing on strengthening its balance sheet, prioritizing debt cuts and asset disposals. As Barclays analyst Wilson Ho put it this month, "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."
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