UPDATE 4-As pressure mounts, China Evergrande seeks to delay payment of onshore bonds

(Add context on the status of its offshore credit in the 8th paragraph, update the actions in the last paragraph)

BEIJING / HONG KONG, Jan. 5 (Reuters) – China Evergrande group will ask for six months to redeem and pay coupons on a 4.5 billion yuan ($ 157 million) bond in a meeting with bondholders this weekend, highlighting the pressure on the indebted property developer.

Evergrande is struggling to repay more than $ 300 billion in liabilities, including nearly $ 20 billion in offshore bonds deemed to be cross-defaulted by rating agencies last month after missing payments.

The postponement is sought due to the “current operational state” of the issuer, Hengda, Evergrande’s flagship real estate arm, said in a statement on Wednesday. He did not provide further details on why the delay was requested. The online meeting with yuan bondholders will vote on a few proposals on January 7 and 10.

Evergrande seeks to postpone the redemption and coupon payment of Hengda Real Estate Group’s January 2023 4.5 billion yuan 6.98% bond to July 8 from January 8, giving bondholders the possibility of reselling the bonds to the issuer this weekend.

Trading in the bonds will be halted from Jan.6 ahead of the meeting with bondholders, Hengda said.

Evergrande, the world’s most leveraged developer, has yet to miss any payments on onshore bonds, which are older than offshore debt. The company failed to make $ 82.5 million in offshore interest payments at the end of a month-long grace period early last month.

The developer’s publicly announced meeting with onshore bondholders stands in stark contrast to the silence he continues to keep on the status of his offshore credit since he first missed paying his coupons in dollars in September. .

In another resolution to be passed at the online meeting, Hengda is to commit to honoring his debt and will have to formulate a reasonable repayment plan as soon as he expects a default on time, the statement said.

Chinese authorities have repeatedly reassured the markets that the woes of Evergrande can be contained and stressed that paying workers’ wages and delivering housing to buyers are priorities for developers to maintain stability. social.

“A postponement is expected,” said a holder of the bonds in question on condition of anonymity. “Since the company is under pressure to prioritize wages … and apartments.”

Evergrande reiterated in a filing Tuesday that it will continue to actively maintain communication with creditors, strive to resolve risks and protect the legitimate rights and interests of all parties.

In December, the promoter set up a risk management committee headed by senior public company officials to study possible restructuring plans.

Hong Kong-listed Evergrande shares traded down 2.5% at 0552 GMT, compared to a decline of 1.2% in the broad market.

($ 1 = 6.3725 yuan) (Reporting by Ryan Woo, Andrew Galbraith, Ella Cao, Clare Jim and Xie Yu; edited by Shri Navaratnam)


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Elaine R. Knight