HONG KONG, March 22 (Reuters) – China Evergrande Group (3333.HK) on Wednesday introduced plans for the restructuring of its $22.7 billion in offshore debt, which may set a template for distressed rivals and form investor sentiment on the nation's embattled property sector.
The world's most indebted property developer gave collectors a basket of choices to swap their debt into new bonds and equity-linked devices backed by the group and its two Hong Kong-listed corporations, Evergrande Property Companies Group (6666.HK) and Evergrande New Vitality Car Group (0708.HK).
With greater than $300 billion in complete liabilities together with offshore debt, Evergrande has been on the centre of a property debt disaster wherein a number of Chinese language builders defaulted over the previous 12 months, forcing many to enter debt restructuring talks.
Whereas the long-awaited proposals may present respiratory area for the developer that was teetering getting ready to collapse a 12 months in the past, few analysts count on its steadiness sheet to get well absolutely any time quickly.
“The proposed restructuring will alleviate the corporate's stress of offshore indebtedness and facilitate the corporate's efforts to renew operations and resolve points on shore,” Evergrande mentioned within the submitting.
The developer expects the proposed restructuring to facilitate an orderly resumption of enterprise operations and gradual technology of money move for debt reimbursement.
Courtroom and arbitration circumstances involving 363.5 billion yuan ($52.83 billion) of debt are ongoing in mainland China, Evergrande mentioned. On a standalone foundation, these is not going to materially have an effect on the offshore restructuring, it added.
Within the two major choices proposed, collectors can both swap all of their holdings into new notes with maturities of 10-12 years, or convert them into completely different combos of latest notes of 5 to 9 years and equity-linked devices.
The developer mentioned it expects to agree restructuring help agreements with completely different teams of bondholders by March 31, with restructuring taking impact on Oct. 1.
Evergrande on Monday mentioned {that a} key bondholder group had agreed to its proposed phrases. It additionally mentioned the corporate expects its overdue monetary stories for 2021 and 2022 to be launched in April and Might.
Commerce in its Hong Kong shares has been suspended since final March, pending launch of the monetary statements, and Evergrande mentioned in Wednesday's submitting that it'll stay suspended till additional discover.
Evergrande additionally gave an replace on its enterprise on Wednesday, saying that extra financing of 250 billion to 300 billion yuan will probably be required because it resumes operations over the following three years.
“Because of this, the corporate’s skill to repay unsecured debt … is comparatively weak, it mentioned, including that free money move is anticipated to extend step by step from the fourth 12 months, assuming the corporate can resume regular operations.
Relating to its electrical automobile enterprise, which some new notes will probably be linked to, Evergrande mentioned it could should be shut down except it obtains new funding.
Sidley Austin and Houlihan Lokey are Evergrande's advisers, whereas Moelis & Firm and Kirkland & Ellis are advising the group of bondholders.
($1 = 6.8802 Chinese language yuan renminbi)
Reporting by Clare Jim and Xie Yu
Modifying by Himani Sarkar and David Goodman
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