Analysis-Evergrande will struggle to revive its debt restructuring plan
By Clare Jim, Xie Yu and Scott Murdoch
HONG KONG (Reuters) — China Evergrande (HK:3333) is trying to stave off liquidation by revising its debt restructuring plan, but its biggest challenge will be convincing its creditors, and shareholders in two of its units, that the proposal is worth their while.
A Hong Kong court on Monday gave Evergrande, the world's most indebted property developer, a five week reprieve to come up with a deal. The company, which has more than $300 billion of liabilities, defaulted on its offshore debt in late 2021 and became the poster child of a debt crisis that has since engulfed China's property sector.
Evergrande's lawyer said the company was working on a revised plan to «monetise the value» of its two Hong Kong-listed units — Evergrande Property Services Group and Evergrande New Energy Vehicle Group (NEV).
Sources familiar with the matter told Reuters that plan included allowing Evergrande creditors to swap their debt into equity and bonds tied to these units.
Evergrande, Evergrande Property Services and Evergrande NEV declined to comment.
For the plan to proceed, shareholders in both units will need to approve issuing new bonds and a large volume of new shares, a feat restructuring experts said would be time-consuming and difficult to achieve.
«Any process to issue new debt would need to take account of the interests of the other shareholders in those subsidiaries,» said Mat Ng, a managing director specialising in restructuring at Grant Thornton Hong Kong.
«Why would those shareholders want to see new debt issued to replace the existing debt issued by Evergrande, what is the benefit for them?»
The convertible bonds and equity-linked notes to be issued by these listed units could also be
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