Evergrande weighs repayments to offshore creditors through cash instalments and equity

WCN Editorial Team 30 May 2022 ASIA BUILDINGS

China Evergrande Group is exploring repayments to its offshore creditors through cash instalments and equity in two of its Hong Kong-listed units, reported Reuters, citing two sources aware of the matter.

The company owes around $19bn to its offshore public bondholders.

Its offshore debt, which comprises loans and private bonds, worth $22.7bn, has been in default after missing out payment obligations late 2021.

In March, the company had revealed that it would announce a preliminary debt restructuring proposal by the end of July.

It aims to sign agreements with the investors by December this year.

As per this proposal, Evergrande intends to repay the principal and interest owed to its creditors by setting these into new bonds, which will then be repaid in instalments within seven to ten years, said a source to Reuters.

The source also revealed that offshore creditors would be able to exchange up to 20% of their debt into equities in the company's Hong Kong-listed property services unit, Evergrande Property Services Group, and electric vehicle producer China Evergrande New Energy Vehicle Group.

These restructuring proposals are currently in the initial stages and can change.

A source revealed: "(Evergrande) Chairman Hui Ka Yan hopes the bondholders will accept the proposal, as there are not many assets offshore that can be sold immediately to pay off the debts."

It is still not clear how the company would get enough cash to make its instalments.

Moelis and Kirkland are serving as advisers to a group of the offshore bondholders.

Evergrande has more than $300bn as liabilities.

The once top property developer in China, Evergrande formed a risk management panel last December.

Mostly, this panel comprises members from state enterprises, with the Guangdong provincial government leading the company’s restructuring.

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Image: Evergrane was once the top property developer in China. Credit: Hands off my tags! Michael Gaida from Pixabay .

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