Embattled Chinese property developerEvergrande(HK:3333Group aims to win creditor approval for its debt restructuring proposals as early as the end of February, the company’s lawyers said on Monday.
Evergrande, once China’s best-selling property developer, is now at the center of the country’s housing crisis. Its $22.7 billion of overseas debt, including private loans and bonds, is considered defaulted after defaulting late last year.
With few financing options and slowing real estate sales, Evergrande, which has total liabilities of $300 billion, began one of China’s largest debt restructuring processes this year.
Evergrande expects to finalize debt restructuring proposals by the end of February or early March, the developer’s lawyers told a Hong Kong court, which postponed a liquidation lawsuit against the developer until March 20, 2023.
Reuters reported earlier this month that Evergrande would sign confidentiality pacts with bondholders in November to prepare for negotiations in December and that terms would be finalized early next year, citing a source with knowledge of the matter.
An investor in the unit of Evergrande Fangchebao, an online real estate and auto marketplace, filed the liquidation petition against the embattled property developer in June because he had failed to honor an agreement to buy back the shares the investor bought in FCB.
Evergrande and its main overseas credit group have voiced opposition to the liquidation petition, stating that the developer was actively pushing overseas debt restructuring work in the interests of all creditors.
An attorney representing the petitioner said Evergrande has not involved his client in the restructuring discussions and that they have no information about the process. Evergrande’s lawyer said the company plans to come up with a proposal before sharing it with all creditors.
During Monday’s hearing, Judge Linda Chan said Evergrande would have to convey “something much more concrete” about its debt renewal process for the next hearing. The judge ordered Evergrande to file a report on the restructuring process 14 days before the next hearing.
As part of the options being considered for the restructuring proposal, Evergrande is studying the possibility of using domestic assets and offering them as additional credit enhancements to secure approval from overseas creditors, sources told Reuters.
Overseas, its main assets in Hong Kong have been taken over by creditors.
In what could cast a shadow over its plan to use domestic assets as a form of “gratuity” for bondholders, a public filing on Saturday showed a parcel of land owned by Evergrande has been acquired by a state-owned company in Shenzhen for 7.5 billion yuan ($1.04 billion).
Evergrande bought the land for 5.6 billion yuan in 2017 and planned to turn it into the group’s headquarters, Reuters previously reported.
The project has been suspended since September 2021, Chinese media outlet Caijing reported on Monday.
An Evergrande spokesman declined to comment.
(1 US dollar = 7.2052 yuan)