China Evergrande to hire more advisers to help deal with debt

SHANGHAI/HONG KONG, Jan 21 (Reuters) – China Evergrande Group (3333.HK) said on Friday it was hiring more financial and legal advisers after a group of international creditors said it would take “measures to ‘execution’ if the developer fails to do so. do more to resolve a payment default.

Evergrande is the world’s most indebted real estate company with more than $300 billion in debt, including nearly $20 billion in international bonds, all deemed to be in default after a series of missed payments late last year. .

Its financial situation has rattled other Chinese property developers over the past year and exacerbated the funding crunch in the sector – an example of which was last week’s failed attempt to sell bonds by rival Country Garden. Holdings Co Ltd (2007.HK). Still, in a positive sign, he surprised the market on Friday with a new $500.2 million convertible bond issue.

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In a filing to the stock exchange, Evergrande said it proposed to engage China International Capital Corp Ltd and BOCI Asia Ltd as financial advisors, and Zhong Lun Law Firm LLP as legal advisor.

It came a day after a group of offshore creditors, represented by law firm Kirkland & Ellis and investment bank Moelis, said they were prepared to take “all necessary steps” to defend the claims. members’ rights after what he called Evergrande’s lack of commitment. Read more

Evergrande earlier asked offshore bondholders to disclose their holdings, a letter seen by Reuters on Friday showed. The developer expects responses by the middle of next week to identify investors for communications to help with the debt restructuring.

Evergrande stock price fell 0.6% on Friday. Its April 2023 U.S. dollar bond was trading at 12.551 cents to the dollar, according to data from Duration Finance, rebounding from Evergrande’s filing on Friday, though still lower than overnight.

SIGNS OF IMPROVEMENT

Stocks and bonds of Chinese property developers have gained this week on hopes that a series of recent government measures would help ease the sector’s funding crunch and reverse the slump in construction, a key driver of economic growth. . Read more

Country Garden, China’s biggest property developer by sales, said it would issue HK$3.9 billion in convertible bonds to refinance debt that will mature in a year.

The bonds, maturing in July 2026 and redeemable in January 2024, bear interest at 4.95% and have an initial conversion price of HK$8.10 per share. At full conversion, the shares would represent 2% of the enlarged capital.

Country Garden shares fell nearly 3% to HK$6.76, while its January 2023 international bond rose to 97.825 from 92.787 overnight.

The new issuance follows a report that the developer found no appetite for a potential $300 million convertible bond last Wednesday. IFR reported that Country Garden had tested the waters for a three-year puttable deal that would carry a yield to maturity of 4.75% and a conversion premium of 25%.

BUY TIME

The government unexpectedly cut borrowing costs on its medium-term loans on Monday for the first time since April 2020 to ease pressure on the cooling economy. On Thursday, it lowered its benchmark rates for business and household loans for a second consecutive month and also lowered its benchmark rate for mortgages. Read more

Reuters reported on Wednesday that policymakers were also drafting nationwide rules to make it easier for developers to access funds from sales still held in escrow accounts, which would improve their short-term liquidity and buy time to pay down debt. Read more

($1 = HK$7.7886)

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Reporting by Brenda Goh in Shanghai and Clare Jim in Hong Kong; Editing by Christopher Cushing and Kim Coghill

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