Evergrande’s offshore creditors fear default | Magnet
China Evergrande Group’s offshore bondholders fear it may be on the verge of defaulting on their debts and want more information and transparency from the cash-strapped property developer, said their advisers.
Evergrande, which could trigger one of China’s biggest defaults as it grapples with debts of over US $ 300 billion (AU $ 410 billion) and whose problems have already caused shock waves in global markets, missed payments on US dollar bonds, with a combined value of US $ 131 million. , which were to take place on September 23 and 29.
With Evergrande keeping silent on U.S. dollar debt payments and prioritizing onshore creditors, offshore investors are wondering if they will face significant losses at the end of the 30-day grace periods for the coupons of the last month.
A group of bondholders turned to investment bank Moelis & Co and the law firm Kirkland & Ellis for advice.
Offshore bondholders want to engage “constructively” with the company, but worry about the lack of information from what was once China’s best-selling real estate developer, said Bert Grisel, chief executive of Moelis based in Hong Kong.
“We all believe that an impending default on offshore bonds is or will occur within a short period of time,” Grisel said on a call with bondholders on Friday.
“Unfortunately, so far we have had a few calls with the advisers,” but there has been no “meaningful dialogue with the company or any information,” he said.
Evergrande, which faces nearly $ 150 million in offshore payment obligations next week, did not respond to a request for comment from Reuters
Neil McDonald, a restructuring partner in Kirkland & Ellis’ Hong Kong office, said bondholders would like more transparency and hope Evergrande will meet disclosure obligations under the listing rules.
Offshore bondholders are also asking for more information on Evergrande’s plan to divest some companies and how the proceeds would be used, the advisers said, adding that the group of creditors they represent was in full swing. growth.
Both advisers said that, including parties who have expressed interest in being part of the group, they represent bondholders who currently hold $ 5 billion in nominal Evergrande offshore bonds.
Evergrande announced last month that it would sell a $ 1.5 billion stake it owns in Shengjing Bank Co Ltd.
The bank, one of Evergrande’s main lenders, demanded that the money from the sale be used to settle the developer’s debts with Shengjing.
Trading in Evergrande shares has been halted since Monday pending an announcement of a major deal.
The marketing of its Evergrande Property Services Group unit has also been stopped.
The state-backed Global Times said Hopson Development would acquire a 51% stake in Evergrande Property for more than HK $ 40 billion (AU $ 7.0 billion), citing other reports from media.
“While we don’t want to exaggerate this, we are obviously making contingency plans right now to ensure that there is no dissipation of assets,” said McDonald.
“And if there is such activity, we will be ready to take steps to protect the rights and interests of American creditors, and we really hope it is not necessary,” he added.
Advisors to the Evergrande offshore bondholders had contacted the developer on September 16 but had not received any assurances from the developer, demanding more transparency.
In another development, Evergrande Citi’s U.S. dollar bond administrator hired law firm Mayer Brown as an advisor, a source familiar with the matter – who declined to be named, told Reuters on Friday.
Citi and Mayer Brown declined to comment.
The possible collapse of one of China’s largest borrowers has raised concerns about the risks of contagion in the world’s second-largest economy, with other indebted real estate companies hit with downgrades following looming defaults.
Associated Australian Press