Evergrande extends deadline for creditors to agree to restructuring plan

Evergrande has extended a program designed to persuade creditors to agree to its long-awaited offshore restructuring plan, reflecting the challenges for the property developer as it seeks to recover from its default 18 months ago.

The company, whose cash crisis at the end of 2021 contributed to an industry-wide liquidity crisis that continues to slow growth in China, said earlier in April that a large group of investors had backed his plan to swap their holdings for new notes and instruments.

But this week Evergrande said in a stock filing that it did not have the support of enough creditors to meet the 75% threshold required to put the restructuring into practice, forcing the company to extend a deadline from April until mid-May.

The extension of the compensation period marks the latest delay in a very opaque and slow restructuring process. Evergrande, which had $300 billion in debt at the time of its bankruptcy and owes about $20 billion in international bonds, is one of several Chinese property developers undergoing restructuring and negotiations with investors.

It faces a liquidation petition in Hong Kong courts, which has been adjourned until the end of July, while its chairman and former China’s richest man, Hui Ka Yan, has come under pressure to sell his assets. .

The company plans to replace existing holdings with various notes, including securities that can be exchanged for shares of its listed property management and electric vehicle subsidiaries in Hong Kong.

“Creditors will have to trust the rise in shares of these entities,” analysts at research firm CreditSights said earlier in April.

Among Class A creditors who hold US dollar bonds, approval of the restructuring plan is 77%, the company said, adding that the extension came at the “request and suggestion” of other creditors.

The cash crunch in China’s real estate sector has shown signs of easing, but house prices and transactions remain under pressure. So far, Beijing has largely focused on completing unfinished residential construction projects and has, through state banks, credit support unveiled only for developers that he considers “high quality”.