Image: Reuters Berita 24 English - According to a person with direct knowledge of the situation, China Evergrande Group is appealing to its...
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| Image: Reuters |
Berita 24 English - According to a person with direct knowledge of the situation, China Evergrande Group is appealing to its creditors abroad for assistance in defending against a case filed in a Hong Kong court that seeks to liquidate the troubled real estate developer.
Prior to the first hearing on the winding-up petition on August 31, Evergrande intends to present the support of creditors to the court as part of the evidence. Evergrande is thought to be in default on its nearly $23 billion in offshore debt and is working on a debt restructuring plan, the person said.
Investor in the Evergrande unit Fangchebao Top Shine Global Ltd announced last week that it had launched a winding-up case against the developer because it had not carried out a deal to buy back shares from Top Shine in Fangchebao.
By lowering the value of the foreign assets that are crucial to the interests of the offshore creditors, a favourable decision on the petition could have an impact on the developer's debt restructuring plan.
According to the source, the developer was not currently exploring an out-of-court settlement with Top Shine.
Evergrande chose not to respond. Top Shine could not be reached for comment right away.
The decision-maker declined to give their identity because the restructuring process for the company is a private matter.
With over $300 billion in liabilities, Evergrande's petition represents the first case of its sort.
Evergrande, formerly China's top developer, stated last week that Top Shine filed the petition for liquidation due to a debt of $110 million. It also stated that it will "vigorously" resist the motion.
It added that the lawsuit won't have an impact on its end-July offshore debt restructuring plan.
Plan for Restructuring
According to the source, Evergrande's restructuring proposal is taking shape, and the business hopes to agree on detailed restructuring terms by the end of this year with its offshore creditors.
Even though creditors would receive very little money from a liquidation or fire sale of Evergrande properties, the developer is moving forward with its asset disposal strategy in an effort to reserve the revenues for restructuring, according to the source.
After a proposed $1.7 billion agreement for the same building faltered late last year, the sale of Evergrande's Hong Kong headquarters building may be completed in the upcoming months, the source added.
A tract of undeveloped land in the suburbs of Hong Kong is still up for sale, the source continued.
By appointing a receiver in February, American asset management Oaktree Capital Management, which provided financing to Evergrande for the development of that land plot, attempted to take possession of the asset.
