Chinese real estate giant Evergrande plans debt restructuring

Chinese real estate giant Evergrande is planning what could become the largest debt restructuring in China and which would bring together all its offshore obligations, according to press reports.

The difficulties of the company, with a debt exceeding 300,000 million dollars, have generated unease in the markets and in the whole of the Chinese economy, with a quarter of its wealth coming from the real estate sector.

The grace periods to repay the interest on two bonds of 82.5 million dollars ended on Monday and, if they had not been returned, they would be the first defaults of the group that until now had avoided bankruptcy.

As part of its restructuring, Evergrande created a “crisis management committee” made up of seven members (two group executives and five heads of state entities).

The committee has been launched “in view of the operational and financial challenges” facing Evergrande, according to a statement to the Hong Kong stock exchange on Monday.

The creation of this body points to a greater involvement of the Chinese government, which days ago had summoned the leaders of Evergrande after they said they could run out of funds to fulfill their obligations.

The Canton provincial government will send a task force to the company, which Jefferies analysts interpret as “a possible takeover of Evergrande.”

Additionally, business outlet Bloomberg News reported that Evergrande planned to include the obligations of its public and private offshore bonds in a restructuring, citing people familiar with the case.

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