Por Xie Yu
HONGKONGNov 28 – Beleaguered Chinese property developer Evergrande Group aims to win creditor approval for its debt restructuring proposals as early as the end of February, the company’s lawyers said on Monday.
Evergrande, once China’s top-selling real estate developer, is now at the center of the country’s real estate crisis. Its $22.7 billion of foreign debt, including private loans and bonds, is considered in default after failing to make payments late last year.
With few financing options and slowing real estate sales, Evergrande, which has total liabilities of $300 billion, began one of China’s largest debt restructuring processes this year.
Evergrande expects to finalize the debt restructuring proposals by the end of February or early March, the developer’s lawyers told a Hong Kong court, which adjourned a liquidation lawsuit against the developer until March 20, 2023.
Reuters reported earlier this month that Evergrande would sign non-disclosure agreements with the bondholders in November to prepare for negotiations in December and that the terms would be finalized early next year, citing a source with knowledge of the matter.
An investor in the unit of Evergrande Fangchebao, an online real estate and auto marketplace, filed the liquidation petition against the embattled property developer in June because it had failed to honor an agreement to buy back the shares the investor bought in FCB.
Evergrande and its main overseas lending group have voiced opposition to the liquidation petition, saying the developer was actively advancing the overseas debt restructuring work in the interest of all creditors.
A lawyer representing the petitioner said that Evergrande has not involved his client in the restructuring discussions and that they have no information about the process. Evergrande’s lawyer said the company plans to draft a proposal before sharing it with all creditors.
During Monday’s hearing, Judge Linda Chan said Evergrande would have to deliver “something much more concrete” about its debt renewal process for the next hearing. The judge ordered Evergrande to submit a report on the restructuring process 14 days before the next hearing.
As part of the options being considered for the restructuring proposal, Evergrande is studying the possibility of using domestic assets and offering them as additional credit enhancement to secure approval from overseas creditors, sources told Reuters.
Overseas, its main assets in Hong Kong have been taken over by creditors.
In what could cast a shadow over his plan to use domestic assets as a form of “gratuity” for bondholders, a public filing on Saturday showed that a parcel of land owned by Evergrande has been acquired by a state-owned company in Shenzhen for 7.5 billion yuan ($1.04 billion).
Evergrande bought the land for 5.6 billion yuan in 2017 and planned to make it the group’s headquarters, Reuters previously reported.
The project has been suspended since September 2021, Chinese outlet Caijing reported on Monday.
An Evergrande spokesman declined to comment.
(1 US dollar = 7.2052 yuan)