The billionaire chair of distressed Chinese developer Country Garden Holdings Co’s and a charity tied to her family received US$50.6 million in dividends from a services company in her property empire.

Yang Huiyan, once China’s richest woman, was on Friday paid about 160.2 million yuan from her direct stake in Country Garden Services Holdings Co, while her family foundation received a payment of about 198.7 million yuan.  

The payouts from the services business occurred even though Country Garden has defaulted on US$10.8 billion of debt, data compiled by Bloomberg show. Earlier this week, the company told some investors it’s considering a further extension of payments on some of its yuan bonds, according to people familiar with the matter.

Yang chairs and holds a sizeable stake in the two listed companies - Country Garden, which started trading in Hong Kong in 2007, and property management firm Country Garden Services, which has traded since 2018. In July last year, she transferred a substantial part of her personal stake in Country Garden Services to a charitable foundation controlled by her sister.

“The willingness of the Yang family to service the debt of Country Garden had been quite low even before the default of the company,” said Zerlina Zeng, senior analyst at CreditSights. “It’s hard for creditors to go after the family and the foundation to recoup their losses,” she said.

Once one of China’s largest private developers, Country Garden is among the firms that have been engulfed by the nation’s prolonged property slump. The holding company defaulted on a dollar bond for the first time in October last year, while a creditor’s petition was filed in a Hong Kong court in February to wind up the firm over non-payment of its debt. In July, the company was given more time to work on an offshore debt restructuring plan when the case was adjourned to January.

A statement to Hong Kong’s exchange earlier this month showed the board of Country Garden Services chose to bring forward the dividends by one month from Sept 30, without disclosing the reason.

Country Garden Services said in a statement to Bloomberg News on Thursday that the dividend payment plan doesn’t relate to any “third-party factor”, and that the payment was brought forward because the firm has “ample cash, and it hopes to alleviate concerns about its stability”.

Country Garden Services reported net income for the first half of 1.44 billion yuan, a 39% drop versus the same period last year, the company said on Aug 22.

Yang has seen her fortune drop to about US$3.7 billion this week, a fraction of the US$34 billion it reached at its peak in 2021, according to the Bloomberg Billionaires Index. She no longer ranks among the world’s 500 wealthiest people.

Yang has given “strong support” to Country Garden since its listing in 2007, and together with family members has provided about HK$38.6 billion through different mechanisms including loans, increases in shareholding and scrip dividends, the company said in a Hong Kong Exchange filing last year. She chose to receive shares instead of cash dividends from the two firms on five different occasions between 2019 and 2022, filings show.

“With the pressure in profits and cash flows, the dividend payout does not look great for creditors,” said Gary Ng, a senior economist at Natixis SA in Hong Kong. “The firm is prioritising short-term dividend payouts to the main shareholders rather than spending the same resources to pay off debt or improve the operating situation.”  

  - Bloomberg