Jakarta –
Plan Evergrande to restructure its large debts was hampered by an investigation into its main subsidiary, Hengda Real Estate Group Co Ltd. This means they cannot issue new debt securities.
Reporting from CNN, Tuesday (26/9/2023), Hengda said it was being investigated by the securities regulator for alleged violations of requirements for disclosing information to investors.
If the restructuring fails and Evergrande is unable to reach a new agreement with its creditors, Evergrande could face liquidation in which its assets would be sold and cease all operations.
As is known, Evergrande was previously the second largest real estate company in China which experienced default with total liabilities of US$ 328 billion as of June 2023. This triggered a crisis in the property sector which continues to burden the economy.
Since defaulting, Evergrande has tried to implement debt restructuring overseen by the Chinese government. Officials and investors hope that the restructuring will help restore confidence in China’s real estate industry, which once accounted for a third of GDP.
According to the plan, Evergrande offers two main options for its international creditors abroad, namely exchanging their bonds for new debt securities with maturities of between 10 and 12 years, or converting them into different combinations of equity-linked instruments and new debt securities with shorter maturities.
These options now appear unlikely as the company is unable to issue new debt due to an investigation into Hengda by the China Securities Regulatory Commission (CSRC), the financial regulator.
“Hengda will actively cooperate with the investigation and strictly fulfill its information disclosure obligations,” he said.
(aid/that)
2023-09-26 02:05:52
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