One of China’s largest developers Evergrande Group announced on reaching an agreement with a group of foreign creditors on the company’s debt restructuring plan.
A group of offshore bond investors have signed three agreements to support the restructuring proposed by Evergrande management. As part of the signed agreements, bondholders will receive new bonds or a combination of new debt and instruments linked to the shares of the group’s subsidiaries. In particular, we are talking about the shares of the property services division of the Evergrande Group, its division for the production of electric vehicles or the developer itself.
However, in order for this plan to materialize, Evergrande must be persuaded to agree to it and other creditors, and the share of those who agreed must be at least 75% of the total number of creditors. To stimulate investors, the company is ready to pay them 0.25% of the amount of its debt to them, if they agree to the terms of Evergrande before April 27, that is, before the company’s expected release date of its financial statements for 2021 and 2022.
In addition, the restructuring procedure will still have to be approved by the courts of the countries where the creditors who signed the agreement with the company are registered. Consideration of the details of the plan by the courts is expected in the summer. If approved, payments to creditors will be made in October-November. The company itself expects to complete the debt restructuring procedure by the end of 2023.
Evergrande has been in serious financial trouble since September 2021. Then the total debt of the group was estimated at $ 305 billion. Evergrande had to sell some assets, as the company was threatened with bankruptcy. Some debt obligations eventually defaulted. Trading of the company’s shares on the Hong Kong Stock Exchange was suspended in March 2022.
Read more about the problems of the Chinese developer in the publication “The Great Chinese Pyramid”.
