Daily Management Review

Evergrande CEO In Hong Kong For Negotiation Restructuring Debts And Asset Sale: Reuters


Evergrande CEO In Hong Kong For Negotiation Restructuring Debts And Asset Sale: Reuters
With the once top Chinese developer Evergrande Group struggles to cope with default on more than $300 billion in debts, discussions on restructuring and asset sales are being conducted with investment banks and creditors in Hong Kong by the company’s CEO, said a report published by news agency Reuters quoting sources familiar with the situation.
Reports claimed that a close confidant of chairman Hui Ka Yan and in charge of Evergrande's day-to-day operations, including finance, CEO Xia Haijun, has been busy in Hong Kong since the past two months negotiating deals. The property giant has a major presence in Hong Kong. The presence of Xia in Hong Kong in negotiations with banks was also confirmed by other reports based on source information.
After not being able to serve three rounds of interest payments on its dollar bonds, Evergrande, which is based in Shenzhen, has not provided any clarity or explanation about its failure and its repayment efforts to its offshore investors. The once second largest property firm of China is now under a debt burden of $300 billion.
This is the first occasion that news about Xia's negotiations in Hong Kong with investment banks and creditors has become public.
It was important for Xia to communicate with foreign banks regarding extensions of debt and repayments schedules, said reports quoting source information. The names of the creditors with whom Xia had recently spoken were not mentioned in the reports.
"Xia also needs to sort out how many off-balance-sheet debts the group has offshore, because many were underwritten at subsidiary levels and he himself may not be even aware of (that)," one of the sources was quoted in a Reuters report as saying. "Before that, they cannot work on restructuring and talk to bondholders," the source added.
There has so far been little success for Evergrande’s repeated attempts to sell off some of its assets in order to raise cash even in the face of growing concerns and fears in recent weeks of a potential collapse of the company and the impact of such an event on the global markets and the Chinese economy.
A proposed $1.7 billion deal to buy Evergrande's Hong Kong headquarters building has reportedly been rejected by China's state-owned Yuexiu Property, according to Reuters, over concerns about the dire financial situation of the property developer.
The spill-over impact of Evergrande's debt problems on the banking system of China was manageable, said a Chinese central bank official on Friday, adding that there was no significant risk exposure of individual financial institutions to Evergrande’s debt.
In recent weeks, there has been no public appearance by Evergrande Chairman Hui and he has also not made any announcements of the company’s plans to address the debt crisis. That has created a flutter among investors as they wonder whether they will have to take a hit after the end of a 30-day grace period for unpaid bond coupons, which is this month.
Hui had urged company executives to ensure the quality delivery of properties and redemption of wealth management products, according to a statement released by the developer last month.