Evergrande hires two new debt intermediaries
2021-09-15: [Original Article Link].
Evergrande, which is on the cliff, is looking for a way to resolve the debt crisis.
On September 14, Evergrande issued the latest announcement, disclosing the outlook for sales in September and the progress of the implementation of measures used to alleviate liquidity problems, and admitted that alleviating liquidity problems did not achieve the expected results.
On the evening of September 13, Evergrande said in a statement on its official website that the remarks about Evergrande's bankruptcy and reorganization on the Internet were completely false, and it did encounter unprecedented difficulties at present, but the company went all out to resume work and production and guarantee the delivery of buildings, do everything possible to resume normal operations.
In addition, in order to further improve liquidity problems and resolve the current debt crisis, Evergrande has hired Huali Annoki (China) Co., Ltd. and Zhonggang Capital as joint financial advisers, work with the company to evaluate the current capital structure, study liquidity, and explore all feasible options to mitigate liquidity problems.
Securities Times brokerage China reporter noted that the two newly appointed intermediaries, Hualian and Zhonggang Capital, have a lot of advantages and belong to the "expert" institutions for international and domestic debt resolution, hualian has participated in the debt resolution cases of Lehman Brothers and General Motors, and also participated in the resolution of Kaisa's debt problem in 2015, while Zhonggang Capital is a local intermediary agency in China, participated in the foreign debt of China Fortune Land, blue light development and other related debt problems resolved.
Solving liquidity problems is less effective than expected
In accordance with the previous regulatory requirements of the Central Bank and the China Banking and Insurance Regulatory Commission, Evergrande Group clarified the relevant information in a timely manner.
First of all, on the evening of September 13, Evergrande issued a statement on its official website. In response to the recent remarks on the Internet about Evergrande's bankruptcy and reorganization, Evergrande Group responded that it was completely untrue, he also said that at present, it has indeed encountered unprecedented difficulties, but the company resolutely fulfills the main responsibility of the enterprise, goes all out to resume work and production, guarantees the delivery of buildings, and tries every means to restore normal operation to protect the legitimate rights and interests of customers.
Secondly, Evergrande gave a detailed description of the sales performance outlook, liquidity problems and the effectiveness and progress of the solutions in detail.
Generally speaking, the real estate industry "Golden Nine and Silver Ten" is the peak sales season. However, Evergrande admits that the continued negative news reports have seriously affected the confidence of potential home buyers, sales are expected to continue to decline significantly in September, leading to a continued deterioration in sales returns, further putting significant pressure on cash flow and liquidity.
In order to ease liquidity, Evergrande has previously disclosed that it has taken contact with potential investors, discussions on the sale of equity in group members, and other assets (properties such as properties, hotels, etc.), but these measures have not achieved the desired results.
Among them, Evergrande Automobile and Evergrande Property have contacted a number of potential investors and sold Hong Kong office buildings, but so far they have not signed any effective agreements.
Evergrande said that it will continue to promote previous measures to alleviate the liquidity problem, including: adjusting the project development schedule, strictly controlling costs, vigorously promoting sales repayment, and striving for loan renewal and extension, the sale of equity and assets, as well as the introduction of investors to increase the share capital of the group and subsidiaries, will be announced in due course.
Newly hired 2 debt intermediaries
Seeing that the liquidity problem is not solved as expected, how can it be? Evergrande on the cliff, in addition to its own efforts, is also seeking the help of external "think tanks.
On September 14, the announcement revealed that the board of directors of Evergrande Group announced that it had been appointed as Huali Annoki (China) Co., Ltd. (referred to as "Hualian") and Zhonggang Capital Co., Ltd. (referred to as "Zhonggang Capital") as a joint financial adviser, the joint financial adviser will jointly evaluate the Company's current capital structure, study the liquidity situation, and explore all feasible options to alleviate the current liquidity problems, strive to reach an optimal solution for all stakeholders as soon as possible.
Brokerage Chinese journalists multi-survey the newly hired 2 financial advisor great background, are to resolve the debt problem experienced the "expert", The personage inside course of study thinks, this introduction 2 financial advisor or for the benefit of Evergrande as soon as possible, it is more difficult to sort the debt problems come up with mobility programmes.
"Hualian is a company that mainly does debt restructuring in the world, mainly providing debt restructuring programs for companies that have defaulted on their debts," huang Lichong, the co-founder of the co-founder of the co-vertical strategy management group, told the brokerage China reporter that Hualian has done Kaisa's debt restructuring in the real estate sector in the past, "they will not provide funds, the main purpose is to provide advice to the board of directors, including how to deal with creditor recourse, if potential creditors are stabilized, etc."
Huang Lichong said that the average company will only ask this type of institution to help if it has defaulted on its debt, and this kind of debt restructuring generally occurs in Western countries, hong Kong is a region where common law applies, so it is also applicable to this kind of debt restructuring, but Evergrande has its particularity, so debt restructuring is difficult.
A brokerage China reporter inquired to understand that Hualian (NYSE:HLI) is an international investment bank headquartered in the United States, which mainly provides clients with mergers and acquisitions, debt restructuring, capital market financing valuation and other businesses.
According to Hualian's official website, Thomson Reuters statistics, Hualian ranked first in the global debt dilemma and bankruptcy restructuring transaction scale in 2020. Although it ranks high in the world, Hualian is not well-known among the Chinese public.
It is understood that in terms of debt restructuring, Hualian has participated in the classic cases including the bankruptcy restructuring of Lehman Brothers, General Motors and energy company Enron, also participated in the photovoltaic enterprise Jiangxi Saiwldk restructuring of overseas debt.
What's more worth mentioning is that in the real estate field, Hualian has participated in the debt restructuring of Kaisa, a real estate company in Shenzhen, the "King of Old reforms.
According to the information, in December 2014, Kaisa suffered "more than 2000 apartments in Shenzhen were locked", and entered the storm in 2015, senior executives resigned, debt default, problems such as project shutdowns and the freezing of assets entering institutions continue to hit.
In February 2015, Kaisa issued a restructuring and refinancing plan, and appointed Hualian to help formulate domestic and foreign debt restructuring plans.
Follow-up, after many efforts, in March 2017, Kaisa one breath announced 2014 to 2016 5 performance reports, completely out of the predicament.
Another intermediary, Zhong Hong Kong Capital, is a local financial advisory agency in China. He has served as a financial advisor for Blu-ray Development in the real estate sector and China Happiness to help resolve related debts.
Brokerage Chinese reporters to see, Zhonggang Capital is a listed company TCL Technology (000100,SZ) set up in Hong Kong company, is a financial licensed enterprises with investment banking and asset management services, in 2020, 18 bond issuance and underwriting projects and 7 debt management projects were completed. In the first half of this year, 13 capital market and financial advisory projects were completed and approved as a member of the European Clearing Bank, can engage in related international securities clearing and custody business.
Data show that July this year, the development of the debt post-default Blu-ray development subsidiary company has made in respect of its dollar bills appointed zhong gang Capital Financial Advisor exploration company, with the consent of the certain bonds authorization of the right holder may options.
February this year, Huaxia happiness is a wholly owned subsidiary of the company cfld (Cayman) Investment Ltd in Singapore stock exchange announcement for the proper settlement of the company's liquidity problems, has been appointed zhong gang Capital Financial Advisor, assist the company in exploring options to guide and solve the problems facing the company.
Note: This is auto-translated version of an article meant for Chinese audience. A mature and nuanced reading is suggested.