China Evergrande turns to advisers who helped fix debt debacles at Lehman, Noble Group, Luckin Coffee as investors brace for losses
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China Evergrande took a step further into potential restructuring of its US$305 billion liabilities after hiring external financial advisers who helped fix major debt implosions, including those at Lehman Brothers and commodity trader Noble Group.
The firm appointed US restructuring experts Houlihan Lokey and Hong Kong-based investment bank Admiralty Harbour Capital to assess its capital structure, evaluate the liquidity and explore ways to ease its current liquidity crunch, according to an exchange filing on Tuesday.
“Hiring these high-profile advisers is basically announcing the restructuring of all of its outstanding debts,” said Zhou Chuanyi, a credit analyst at Lucror Analytics in Singapore. “At this moment, offshore bond holders should already be fully aware of the possible haircuts, which is very likely to happen. If it pushes to the extreme and go into the liquidation, the offshore bond holders may get nothing.”
China Evergrande’s shares slumped 12 per cent to HK$2.97, a level not seen since November 2014. The plunge has snowballed to about 80 per cent this year, wiping out HK$158 billion (US$20 billion) in market capitalisation. Its property management and new-energy vehicle units have lost a combined HK$283 billion in value.