- Evergrande owes billions of dollars and has yet to pay them off.
- In fact, it is in default and its default continues to put the Chinese economy between a rock and a hard place.
- In July it will present a payment plan on which part of the (little) global stability in terms of the economy depends.
China Evergrande Group, the real estate holding company that collapsed in 2021, is one step away from presenting an installment payment plan to owners of its public bonds outside of China.
Only for those titles, it owes a whopping 19 billion dollars and since the crisis began, it has been on the verge of default. In fact, he is in a situation of default that worries everyone.
Evergrande’s idea is to pay in installments in cash and with shares of two of its subsidiaries listed on the Hong Kong stock exchange.
It is, by far, the most indebted private company and with the greatest problems to settle its liabilities in the world.
Evergrande has, strictly speaking, a liability of US$300 billion, including all loans and private bonds. It failed to meet its obligations due at the end of 2021 and in March said that in July 2022 it will present a preliminary proposal for the refinancing of the liability.
How do you plan to pay off your Evergrande debt?
As part of the payment proposals, Evergrande expects to return the principal bond and interest to foreign creditors with the issuance of new titles, which will be paid in installments over a period of up to ten years. Reuters.
The creditors of other countries will be able, according to what has been leaked to the international financial media, to exchange a portion of their debt for shares in the real estate services subsidiary of the holding company, Evergrande Property Services Group, and in the ecar manufacturer China Evergrande New Energy Vehicle Group, both owned by the Evergrande root group.
According to unofficial sources, lCreditors may exchange up to 20 percent of their credits for those shares.
Likewise, it is noted that this is the initial idea and until July, when the formal offer is presented, there may be changes.
Along with Evergrande, the government of the Chinese province of Guangdong, which participates in all of the company’s real estate deals, is in trouble.
The restructuring is being carried out by investment bank Moelis & Co and law firm Kirkland & Ellis.
Blow to the world economy
Evergrande’s defaulted bonds hit other firms in the Chinese real estate sector, which has been almost paralyzed for six months, in a cascade. This is serious because it is one of the pillars of the economy of that country.
Evergrande also has trouble paying suppliers and finishing unfinished housing projects.
The complete default was stopped by Beijing, from where funds came to mitigate the impact. Likewise, this contribution served to avoid completely paralyzing the works, but the investors are still not sure that they will recover their money.
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