top of page

Several creditors support Evergrande's plan to restructure its US$19 billion offshore debt.

According to a filing on Monday evening, debt-stricken Chinese real estate developer Evergrande declared that it had hit "a substantial milestone" after reaching an agreement with some of its creditors on its US$19.15 billion in offshore borrowing.

Three different agreements to "cooperate in order to facilitate the implementation of the proposed restructuring" have been signed by creditors who account for more than a fifth of Evergrande's existing US$13.9 billion bonds and a third of the US$5.23 billion bonds that the company guarantees, according to the developer.

The "milestone" was reached three days after the date Evergrande had specified in a court hearing last month. As developers scrambled to settle their debt by the end of March, debt-ridden Sunac also reached an agreement with some offshore creditors last Tuesday.

The settlement agreed by Evergrande and its creditors will act as a standard for other collapsed real estate companies, offering guidance on the kinds of terms that creditors will accept.

While this firm is the most indebted, Raymond Cheng, managing director at CGS-CIMB Securities, stated last month: "Evergrande’s plan should set a bottom line as this company is deepest in debt and its offer should be the toughest. If other developers’ offers are less appealing than Evergrande’s proposal, it would be hard to win over creditors."

Creditors may elect to obtain fresh bonds with an extended maturity of 10 to 12 years under the agreed-upon parameters. Another choice is to acquire fresh bonds with a five to nine-year tenor together with bonds convertible into stock in the company, the developer's property services division, or its new energy vehicle division.

These two choices are open to creditors of one private loan, one series of Hong Kong dollar-denominated convertible bonds, and ten series of dollar-denominated senior secured notes.

Evergrande will also issue new bonds totaling US$800 million to holders of dollar-denominated bonds guaranteed by its offshore financing arm Tianji Holding Limited, as well as new bonds worth US$6.5 billion to holders of four series of dollar notes issued by Scenery Journey Limited, a unit under the developer.

Evergrande announced that it had "launched a restructuring support agreement" for the creditors of certain offshore and onshore private loans, repurchase obligations, and guarantees made by the developer. Additionally, they have the option of selecting a combination with a debt-to-equity swap or brand-new bonds with maturities of up to 12 years.


600 views0 comments
bottom of page