China Evergrande scraps creditor meetings in risk to US$20 billion debt restructuring as homes sales sag, lawsuits snowball

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2023-09-23T03:57:12.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

Troubled developer has cancelled meetings scheduled for September 25 and 26, citing weaker than expected sales and need to reassess restructuring terms

Meetings were previously adjourned for almost a month after offshore creditors raised more questions about the state of its business and financials

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Yujie Xuein Shenzhen

Published: 11:57am, 23 Sep 2023Updated: 2:49pm, 23 Sep 2023

China Evergrande Group, struggling under US$327 billion of liabilities, has surprisingly scrapped creditor meetings scheduled for next week as home sales sagged and lawsuits snowballed, dragging bondholders back to the drawing board in the country’s biggest corporate restructuring.

The developer cancelled four meetings for two classes of its creditors in Hong Kong and the Cayman Islands set for September 26, according to an exchange filing late on Friday. Two meetings on September 25 for another group of bondholders in Hong Kong and the British Virgin Islands were also halted.

The company will make further announcements when there is an update in respect of amendment to the restructuring terms, it added. The meetings were previously adjourned by almost a month from late August, after the Shenzhen-based developer of fallen billionaire Hui Ka-yan fielded more questions from offshore creditors about the state of its business and financials.

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Boom, bust and borrow: Has China’s housing market tanked?

“The sales of the group have not been as expected,” it said. “Based on the current situation and consultations with its advisers and creditors, the company considers it necessary to reassess the terms of the proposed restructuring to meet the objective situation and the demand of the creditors.”

Evergrande is seeking to reorganise US$20 billion of defaulted debt and claims in the largest ongoing workout by a Chinese company. The developer, which had 2.4 trillion yuan (US$327 billion) in total liabilities on June 30, offered new bonds, convertible debt and stakes in its property management and car-making units to appease creditors.

While Evergrande did not provide the latest sales figures, recent updates from other indebted peers suggest China’s housing market continues to falter this quarter. Sales at Country Garden Holdings and Sunac China Holdings shrank since June, their filings showed, despite state-driven measures to spur home purchases.

Hui Ka-yan, the chairman and founder of Evergrande, seen during the 18th Session of the Communist Party’s 12th Standing Committee meeting. Photo: Handout