Beijing [China], March 27 : China's crisis-hit real estate giant Evergrande has rolled out its restructuring plan and it involves USD 20 billion in foreign debt, NTD reported.
China's giant property developer that defaulted on its US dollar bonds more than a year ago, has struck a deal with a group of bondholders, bringing its prolonged debt negotiations close to the finish line, The Wall Street Journal reported.
Evergrande's negotiations with bondholders which investors said often seemed close to faltering covered over USD 19 billion of bonds, as per the news report. The restructuring has been agreed to by an ad-hoc bondholder group that holds more than a fifth of Evergrande's international bonds, The Wall Street Journal reported citing people familiar with the matter.
The company's other bondholders have until March 31 to give their approval to the restructuring. Evergrande said if the agreement does not go ahead and the firm goes into liquidation, investors are likely to make somewhere between 2 cents and 9 cents for every dollar of bonds they hold, as per the news report.
China's real estate giant has given its investors two options. Those who are ready to accept any principal losses on their bonds can get new debt with a maturity of 10 to 12 years, paying coupons of 2 per cent to 4 per cent a year, according to The Wall Street Journal.
Investors who are ready to accept some principal losses can opt for a mix of shorter-term bonds and equity-linked notes, which will be supported by shares in Evergrande or two of its listed subsidiaries, a property services company and a new energy vehicle company.
The ad-hoc group includes distressed debt funds that picked up China's property developer's bonds for cheap after its default in December 2021. The company's USD 4.7 billion bond, which is due to mature in June 2025, was bid at just over 9 cents on the dollar on Thursday, The Wall Street Journal reported citing TradeWeb.
As per the news report, Evergrande was one of China's biggest sellers of new homes until it entered a downward spiral in late 2021, after Chinese authorities announced stringent borrowing restrictions on property developers.
Before its liquidity crisis, the property developer had borrowed heavily from banks and investors in mainland China. The real estate giant has spent much of the past year attempting to work through numerous challenges, as per the news report. The Chinese property developer stopped paying most of its contractors and construction when it ran short of cash last year.
Evergrande even stopped making interest and principal repayments on wealth-management products it had sold to employees, clients, and contractors to finance its operations, according to the news report. Recently, the real estate firm sold assets to repay debt, including Evergrande's stake in a domestic bank, which was bought by state-owned enterprises for more than USD 1 billion.
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