evergrande: Chinese real estate agent’s $ 300 billion debt: Evergrande CEO under restructuring, asset sale talks

The chief executive of Evergrande Group is in talks in Hong Kong with investment banks and creditors over a possible restructuring and sale of assets, two people said, as the Chinese developer battles the default of over $ 300 billion in debt.

CEO Xia Haijun, a confidant of President Hui Ka Yan and who runs Evergrande’s day-to-day operations, including financing, has been in Hong Kong, where the real estate company has had a strong presence, for more than two months, the two said. sources at Reuters. .

A third source said Xia was in discussions with banks and creditors in Hong Kong, but did not specify what it was.

Shenzhen-headquartered Evergrande, which weighs under more than $ 300 billion in liabilities, has left foreign investors in the dark about repayment plans after already missing three rounds of interest payments on its dollar bonds .

Xia’s talks with investment banks and creditors in Hong Kong had not been previously reported.

One of the sources said Xia needs to communicate with foreign banks about loan extensions and repayments. The source declined to disclose the identity of the creditors Xia had spoken to in recent days.

“Xia also needs to determine how many off-balance sheet debts the group has overseas, as many have been taken out at the subsidiary level and he himself may not even be aware of it,” he said. declared. “Before, they can’t work on the restructuring and talk to bondholders.”

Evergrande has been pushing to divest some of its assets to raise funds – efforts that have yet to yield much success – as concerns have grown in recent weeks over a possible collapse and the impact on global markets. and the Chinese economy.

Chinese state-owned company Yuexiu Property withdrew from a proposed $ 1.7 billion deal to buy Evergrande’s Hong Kong headquarters over concerns over the developer’s dire financial situation, Reuters reported on Friday.

A Chinese central bank official said on Friday that the ripple effect of Evergrande’s debt problems on the banking system was controllable and the risk exposures of individual financial institutions were not significant.

Anxious investors

Evergrande and Xia did not respond to Reuters requests for comment.

The sources, who have direct knowledge of the development, declined to be named due to the sensitivity of the matter.

Evergrande chairman Hui has not appeared in public in recent weeks or announced plans to address the group’s problems, leaving investors to question whether they should post losses when grace periods fall. 30 days will end this month for unpaid bond coupons.

Last month, the developer released a statement saying Hui had urged company executives to ensure quality delivery of properties and buyout of wealth management products.

Xia, who is also vice chairman of the board, joined the company in 2007 and is responsible for the operation and management of Evergrande’s capital, as well as legal and foreign affairs, according to the site. Internet of society.

He has been in Hong Kong since July, according to one of the sources. The second source said Xia had met with Chinese investment banks in the city to explore possible asset sales.

Evergrande, once the best-selling developer in China, said it was looking to divest stakes in assets, including its services and electric vehicle units, to raise funds.

More transparency sought

The developer is finalizing details of the sale of 51% of its Evergrande Property Services unit to Hopson Development for HK $ 20 billion ($ 2.57 billion).

Investment bank Moelis & Co and law firm Kirkland & Ellis, representing bondholders who currently hold $ 5 billion in nominal Evergrande offshore bonds, last week requested more information and transparency in Evergrande.

The developer said last month that he had appointed Houlihan Lokey and Admiralty Harbor Capital as joint financial advisers to review his financial options, as he warned of the risks of default in the face of plummeting real estate sales.

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