Evergrande crisis: Hui’s ‘arrest’ clouds debt-support deal with offshore creditors, access to assets
- Hui and his offshore family vehicle Xin Xin (BVI) are sponsors of the restructuring support agreements with offshore creditors
- Hui agreed in March to pay fees to a committee representing creditors, and hired Baker McKenzie as personal counsel
China Evergrande Group’s US$20 billion debt workout plan is at risk of falling apart in the home stretch, as the “arrest” of Hui Ka-yan clouded the fallen billionaire founder’s capacity to deliver his obligations and warranties in several deals with offshore creditors.
Hui and his offshore family vehicle Xin Xin (BVI) are sponsors of the restructuring support agreements with a committee of foreign creditors, including global hedge funds and distressed-debt investors, according to official documents. The situation also raised question marks over access to his assets to pay legal advisers and creditors.
03:18
China Evergrande suspends market trading amid questions about chairman’s whereabouts
“In general, the restructuring proposal needs approvals and signatures of key people in charge,” said Raymond Cheng, managing director of CGS-CIMB Securities in Hong Kong. As the number one person in Evergrande, “[The fact] Hui’s missing will definitely have a huge negative impact on the restructuring process.”
Hui and Xin Xin are sponsors of the restructuring support agreement with China Evergrande’s class A creditors, who held US$14.2 billion of claims tied to 10 defaulted US dollar-denominated bonds, one Hong Kong dollar convertible bond and one private loan.
Hui separately is also a sponsor of another restructuring agreement with creditors with claims against China Evergrande as guarantor for US$5.23 billion of bonds sold by its offshore unit Scenery Journey and other yuan-based options and obligations.
03:11
China real estate woes: Evergrande files for bankruptcy protection in New York
Offshore creditors holding 77 per cent and 91 per cent of those debts, respectively, have given their consent to the restructuring terms based on the most recent update in April. They may serve a 10-day notice to withdraw their support, according to the support agreements.
Apart from his controlling equity stake in China Evergrande, and indirectly its two other listed vehicles, Hui’s personal assets include US$600 million worth of the company’s defaulted bonds. He is also listed as the owner of Event, a 60-metre luxury superyacht valued at US$60 million.