China Evergrande Group has proposed a new debt restructuring plan for offshore bondholders, Reuters reported citing two people familiar with the matter.
The plan would swap debt into about a 30% equity stake in each of the developer’s two Hong Kong-listed subsidiaries, according to the report.
Evergrande’s legal representative said at a Hong Kong court hearing Monday that the builder will look to use shares of China Evergrande New Energy Vehicle Group Ltd. and Evergrande Property Services Group Ltd. as key components in any further debt-restructuring attempts.
The world’s most indebted developer shocked creditors and other observers last month when it said it would reassess its offshore-debt restructuring plan. Evergrande said then that it was unable to meet Chinese requirements to issue new bonds, securities that were a crucial part of that proposal when released in March.
The company has until Dec. 4 to come up with a concrete new restructuring proposal. That is when the next hearing on a winding-up petition against Evergrande is scheduled, and the case’s judge said not having a plan would “very likely” result in an asset-liquidation order.
Evergrande’s original plan included options for some creditors to get instruments tied to equity of the two units as well as the builder itself. The March proposal included terms for four different creditor classes - what it categorized as Class A and Class C creditors, as well as those of units Scenery Journey Ltd. and Tianji Holding Ltd. The Reuters report didn’t specify whether the equity component might apply to all creditor classes.
Shares of both the NEV and property-management firms have plunged more than 80% this year, putting their combined market value below HK$10 billion ($1.3 billion).
Evergrande did not respond to a request for comment, according to the report.
--With assistance from Jackie Cai.
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