Offshore bondholders of China Evergrande Group are concerned that the company is on the verge of defaulting on debt payments, and they want more details and openness from the cash-strapped property developer, according to their advisers.
Evergrande, which is grappling with debts totaling more than $300 billion and whose woes have already sent shockwaves through global markets, missed payments on dollar bonds worth a total of $131 million that were due on September 23 and 29.
Offshore investors have been left wondering if they will face large losses at the end of the 30-day grace period due to Evergrande's silence on dollar debt payments and prioritization of onshore creditors.
Moelis & Co, an investment bank, and Kirkland & Ellis, a law firm, have been hired to advise a group of bondholders.
Offshore bondholders would like to work with the firm "constructivly," but are worried about insufficient information from the company that was once the top-selling property developer of China, according to Bert Grisel, a managing director at Moelis in Hong Kong.
"We all feel that an imminent default on the offshore bonds is or will occur in a short period of time," Grisel said on a call with bondholders on Friday.
"Unfortunately, so far, we have had a couple of calls with the advisers," but there had not been any "meaningful dialogue with the company or provision of information", he said
There were no comments on the matter available from Evergrande.
The company faces almost $150 million in offshore payment obligations next week.
Bondholders want more transparency, according to Neil McDonald, a restructuring partner in Kirkland & Ellis' Hong Kong office. He hopes Evergrande will meet its disclosure obligations under stock exchange rules.
The advisers said the offshore bondholders are also demanding more information about Evergrande's plan to divest some businesses and how the proceeds will be used, and that the creditors group they represent is growing.
According to the two advisers, they represent bondholders who presently own $5 billion in Evergrande nominal offshore bonds, and the holders include those who have expressed an interest in joining the group.
Last month, Evergrande announced that it would sell a $1.5 billion stake in Shengjing Bank Co Ltd. The bank, which is one of Evergrande's main lenders, demanded that the proceeds from the sale be used to pay off Evergrande's debts to Shengjing.
Evergrande stock has been suspended since Monday pending the announcement of a major deal. Trading in the company's Evergrande Property Services Group unit has also been suspended.
Hopson Development was set to buy a 51 per cent stake in Evergrande Property for more than HK$40 billion ($5.1 billion), according to a report by China's state-owned Global Times based on other media reports.
"Whilst we don't want to overstate this, we are obviously at this point in time preparing contingency plans to ensure that there is no dissipation of assets," McDonald said.
"And if there is such activity, we will be prepared to take steps to protect the rights and interests of U.S. creditors, and we really hope that that's not necessary," he added.
On September 16, the company was contacted by the advisers for offshore Evergrande bondholders, but received no assurances, prompting them to demand more accountability.
(Source:www.reuters.com)
Evergrande, which is grappling with debts totaling more than $300 billion and whose woes have already sent shockwaves through global markets, missed payments on dollar bonds worth a total of $131 million that were due on September 23 and 29.
Offshore investors have been left wondering if they will face large losses at the end of the 30-day grace period due to Evergrande's silence on dollar debt payments and prioritization of onshore creditors.
Moelis & Co, an investment bank, and Kirkland & Ellis, a law firm, have been hired to advise a group of bondholders.
Offshore bondholders would like to work with the firm "constructivly," but are worried about insufficient information from the company that was once the top-selling property developer of China, according to Bert Grisel, a managing director at Moelis in Hong Kong.
"We all feel that an imminent default on the offshore bonds is or will occur in a short period of time," Grisel said on a call with bondholders on Friday.
"Unfortunately, so far, we have had a couple of calls with the advisers," but there had not been any "meaningful dialogue with the company or provision of information", he said
There were no comments on the matter available from Evergrande.
The company faces almost $150 million in offshore payment obligations next week.
Bondholders want more transparency, according to Neil McDonald, a restructuring partner in Kirkland & Ellis' Hong Kong office. He hopes Evergrande will meet its disclosure obligations under stock exchange rules.
The advisers said the offshore bondholders are also demanding more information about Evergrande's plan to divest some businesses and how the proceeds will be used, and that the creditors group they represent is growing.
According to the two advisers, they represent bondholders who presently own $5 billion in Evergrande nominal offshore bonds, and the holders include those who have expressed an interest in joining the group.
Last month, Evergrande announced that it would sell a $1.5 billion stake in Shengjing Bank Co Ltd. The bank, which is one of Evergrande's main lenders, demanded that the proceeds from the sale be used to pay off Evergrande's debts to Shengjing.
Evergrande stock has been suspended since Monday pending the announcement of a major deal. Trading in the company's Evergrande Property Services Group unit has also been suspended.
Hopson Development was set to buy a 51 per cent stake in Evergrande Property for more than HK$40 billion ($5.1 billion), according to a report by China's state-owned Global Times based on other media reports.
"Whilst we don't want to overstate this, we are obviously at this point in time preparing contingency plans to ensure that there is no dissipation of assets," McDonald said.
"And if there is such activity, we will be prepared to take steps to protect the rights and interests of U.S. creditors, and we really hope that that's not necessary," he added.
On September 16, the company was contacted by the advisers for offshore Evergrande bondholders, but received no assurances, prompting them to demand more accountability.
(Source:www.reuters.com)
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