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Evergrande Executives to Hold First Investor Call Since Default

Evergrande’s debt crisis has roiled other developers and global financial markets, contributing to a sharp slump in China’s property market


China Evergrande
Evergrande said in a filing it would use the proceeds to repay construction fees of 920.7 million yuan for projects in Hangzhou. Photo: Reuters.

 

China Evergrande Group will hold an investor call at 9m on Wednesday evening Hong Kong time joined by its financial advisers, sources said, the first such call since it defaulted on some dollar bond payments last month.

Newly appointed company executive director Shawn Siu, who is also the chairman of Evergrande New Energy Vehicle Group is expected to join the call, sources told Reuters.

Chen Yong, a member of the property developer’s risk management committee, will also be present, they said, along with Andrew Huang, general manager of Evergrande’s Hong Kong branch.

Evergrande’s debt crisis has roiled other Chinese developers and global financial markets over the past year, contributing to a sharp slump in China’s property market.

Once China’s top selling real estate developer, Evergrande has more than $300 billion in liabilities, including nearly $20 billion of international bonds all deemed to be in default.

Evergrande set up the risk management committee in December with mostly members from state enterprises, as the Guangdong provincial government leads the work on the firm’s restructuring.

The embattled firm on Monday sought more time from its offshore bondholders to work on a “comprehensive” and “effective” debt restructuring plan, after a group of Evergrande’s offshore creditors said they were ready to take “all necessary actions” to defend their rights if the company did not show more urgency to resolve a default.

 

Weakened Covenants

Evergrande has also asked the bondholders to disclose their holdings by mid-this week to identify investors for communications, and hired more financial and legal advisers to follow up with demands from creditors.

Shares of Evergrande closed up 1.7% on Wednesday, while its defaulted dollar bond due April 2022 dropped to 15.997 cents on the dollar from 17.074 overnight, according to data by Duration Finance.

Rating agency Moody’s said in a report on Wednesday that covenant packages in Evergrande’s offshore issuances had become increasingly lax, loosening or eliminating key protections, and putting the recovery prospects for offshore bondholders in peril.

Offshore bondholders rank behind the creditors of Evergrande’s over 1,950 onshore subsidiaries, Moody’s added, and none of which guarantee the offshore bonds.

The agency said the weakened covenants and increased size of debt carve-outs have allowed the firm to increase leverage materially.

“Flexible covenants have left Evergrande and other Chinese property developers with a corporate family rating of B3 negative and below vulnerable to the highly cyclical nature of China’s real estate market,” Jake Avayou, a Moody’s vice president and senior covenant officer, said in the report.

 

  • Reuters, with additional editing by George Russell

This report was updated with new information on January 26, 2022.

 

READ MORE:

 

Evergrande Shares Jump on News China Official Will Join Board

 

Evergrande Hires More Advisers, Country Garden In Bond Surprise

 

Evergrande Shares Rise After Winning Bond Payments Delay

 

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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