Last Tuesday (June 28), China Evergrande announced that Top Shine Global Limited of Intershore Consult (Samoa) Limited filed a winding-up petition against the company to the Hong Kong High Court on June 24, involving about 862.5 million claims. Hong Kong dollars (accounting for less than 1% of Evergrande Group's total overseas debt).
In the announcement, Evergrande said it would strongly oppose the petition.
In addition, Evergrande also expects that the submission will not affect the company's restructuring plan or timetable.
Xiao En, executive director of China Evergrande, responded that at present, the operation of Evergrande’s board of directors, risk mitigation committee and management teams at all levels is not affected. communicate.
As early as March 22, Sean said in an investor conference call: "As of March 22, the company has contacted 89 overseas institutional creditors for opinions and views." But for now, Evergrande has Obviously not negotiated with foreign creditors.
Up to now, Evergrande has officially defaulted on 13 US dollar bonds totaling about US$19.285 billion.
Hong Kong 01 Cartography
Great pressure on overseas debt
Evergrande is not without room for maneuver.
Settling with creditors, dismissing or staying a winding-up petition, is a common solution for most businesses.
But for a company with a trillion-dollar asset like Evergrande, the complexity of revoking a winding-up petition is far beyond many people's imagination.
Evergrande's debt crisis "exploded" in September last year, and was then interviewed by the government.
On December 3, 2021, Evergrande announced a notice of a guarantee obligation of US$260 million, which caused creditors to request accelerated maturity of the debt, officially announcing that Evergrande’s first overseas debt was overdue.
At this time, the Guangdong provincial government sent a working group to Evergrande to resolve debt risks.
The solution ideas of Evergrande’s chemical bond team are divided into domestic bonds and overseas bonds.
The settlement of domestic bonds has been fairly smooth, and there has been no record of default.
And under the strong vote of several large investment institutions, the extension of these domestic bonds was successfully approved by the vote.
But overseas debt is the real thorny issue in Evergrande's debt restructuring.
Evergrande’s announcement shows that as of March 22, China Evergrande’s overseas debt was about 22.7 billion US dollars.
Evergrande has also emphasized many times before, imploring foreign creditors to give more time, and calling on foreign creditors not to take any radical legal actions.
However, the bad news for foreign creditors has continued.
Can it be reorganized?
It is understandable that foreign creditors are anxious.
Overseas creditors generally have to wait for the domestic assets to be divided up by domestic creditors, and there are domestic non-mortgage creditors that have not been repaid and dealt with, as well as bitter owners and suppliers who have not yet handed over the house. After all the dust has settled, the overseas can be reorganized.
Kaisa’s debt restructuring took a year and a half, and it was finally able to resume trading.
(file picture)
For reference, before Evergrande, Kaisa also fell into a similar overseas restructuring predicament in 2014.
From the outbreak of the crisis at the end of 2014 to the completion of the restructuring of US dollar bonds in July 2016, it took Kaisa one and a half years to finally realize the restructuring of overseas debts and successfully resume trading and listing.
However, within a year and a half of Kaisa's restructuring, the boom in domestic real estate, especially the Shenzhen market, has made these overseas creditors and Kaisa a community of interests closely bound together.
Unlike Kaisa, Evergrande obviously did not catch up with a good time, and Evergrande has a larger scale of debt, which is more difficult to solve...
For details, please read the 324th issue of "Hong Kong 01" Electronic Weekly Newsletter (July 4, 2022) "
Can Evergrande encounter a liquidation crisis in July?
".
Click here
to try out the weekly e-newsletter for more in-depth reports.