Beijing-based developer China Oceanwide Holdings has asked a group of EB-5 lenders on its unfinished Los Angeles project for forbearance, after the firm defaulted on a $157 million loan tied to the project.
Oceanwide is “currently negotiating with the lender to sign an updated forbearance agreement in order to suspend the lender from taking any further legal actions” on Oceanwide Plaza, the firm said in a Hong Kong Stock Exchange filing that announced its mid-year financial results last week.
Oceanwide defaulted on the loan from a group of EB-5 investors, called LA Downtown Investment, in May, according to a notice filed with L.A. County. As of January, Oceanwide owed $157.4 million in principal plus interest.
Oceanwide Plaza has sat unfinished since 2019. In filings with the Hong Kong Stock Exchange, the firm said it would need more than $1.2 billion to finish construction, on top of the $1.1 billion it has already spent.
Under state regulations, a foreclosure can start 90 days after the initial notice of default is filed, meaning the EB-5 lenders could have scheduled a foreclosure any time after Aug. 8.
However, in mid-August, a California state court of appeals temporarily blocked a foreclosure of Oceanwide Plaza from moving forward. A three-judge panel said it needed more time to review claims from Oceanwide’s general contractor on the project, Lendlease, over who would get paid first in the event of a foreclosure.
A foreclosure would also prevent Oceanwide from moving forward with a sale of the development.
The firm is “actively negotiating” to sell the project, according to last week’s filing. All funds from the sale would go towards making creditors whole and legal fees, Oceanwide added.
Oceanwide said it had found a buyer in August of last year — a group that had signed a nonbinding letter of intent. However, that buyer “did not proceed to enter into the sale and purchase agreement as planned,” Oceanwide said in its filing.