Evergrande to meet onshore bondholders in bid to delay payments

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Evergrande is in a last-ditch effort to turn things around. The most important thing that matters for them and they are focusing on is completing its projects.

This week the indebted organization will hold a meeting with its domestic bondholders. The agenda of the meeting will be to extend the repayment deadlines and to complete the ongoing projects.

This is important for a company which is the starting point of the Chinese real estate crisis.

Evergrande’s main onshore subsidiary, Hengda Real Estate Group, is about to hold meetings and subsequent voting from January 7-10 with holders of its Rmb4.5bn (₹52.5bn) onshore bond.

They said this in a statement released on Wednesday to Shenzhen stock exchange.

As matters force them to default on their international debts, they became the world’s most indebted developer with more than $300bn (₹22tn) in liabilities. These liabilities range from offshore to onshore bonds to sums owed to contractors.

It is in a large-scale and politically sensitive restructuring process.

The crisis deepened after the group missed a series of payments on offshore bonds. It typically transferred the funds before the 30-day grace period. But they failed to advance any payment after the grace period in December.

This made rating agency Fitch declare the group to have officially defaulted. This week’s meeting will involve holders of separate onshore renminbi-denominated debt that will mature in January 2023.

The group will seek to change the date of redemption. It will then allow the investors to redeem it from January 8 to July 8. The meeting will also aim to delay the due of coupon payment occurring that same period.

The Chinese authorities and the investors have stressed the company to finish hundreds of projects. It is important because the consumers have paid the amount before the completion of construction, and a halt in work could cause more crises.

On Monday, trading in its shares was suspended after Chinese media reported that the company would be forced to tear down 39 residential buildings in Hainan. The group confirmed it in its filing to the Hong Kong stock exchange on Tuesday.

As per reports, their deals for 2023 are at Rmb443bn, a 39% fall from last year. The report also states a fall in sales by 99% in December y-o-y. Advisors of international bondholders of the group complained about the lack of meaningful engagement.

China has to face another crisis this time in the bond market, possed by Huarong. A state-owned asset manager has the reputation of being a bad debt manager. It lost half its value when trade on its share resumed.

Its trading was suspended when it failed to release its results, which led to prices of offshore bonds collapsing in April. But this group was bailed out by the government who did not want to see another major company collapse.

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