Recently, China Evergrande Group issued an announcement that its overseas debt restructuring process suffered a heavy setback. The news is undoubtedly a huge blow to investors and creditors concerned about Evergrande's fate.
According to the announcement, since March 22 this year, Evergrande's sales have not met the company's expectations. Due to the large gap between the actual situation of the company and the expectations of its advisers and creditors, Evergrande believes that it needs to re-examine the terms of its debt restructuring to better match the current objective environment and the demands of creditors. As a result, the scheduled debt restructuring meeting was postponed indefinitely.
However, the house leak coincided with overnight rain. After the debt restructuring meeting was postponed, China Evergrande announced on the evening of the 24th that because its subsidiary Evergrande Real Estate Group is under investigation, the current situation cannot meet the qualifications for the issuance of new notes. This is undoubtedly a major setback for Evergrande's debt restructuring plan, as the issuance of new notes is an important part of Evergrande's restructuring plan.
In March, Evergrande unveiled a US$19.149 billion offshore debt restructuring plan and offered creditors three options, including issuing new notes for debt replacement, conversion to Evergrande property, a combination of Evergrande new energy vehicles or equity-linked notes linked to Evergrande's listed stocks. These options require the issuance of new notes to complete the restructuring plan.
However, now that Evergrande Real Estate Group has been placed under investigation, the eligibility to issue the new notes has been questioned, which will have a direct impact on Evergrande's debt restructuring plan. As an important part of the restructuring plan, the blockage of the issuance of new notes is undoubtedly a major blow to Evergrande's debt crisis.
Although Evergrande's revenue reached 128.18 billion yuan and gross profit in the first half of this year was 9.80 billion yuan, the dual pressure of its operating loss and non-operating loss still made the company's financial situation not optimistic. As of the end of June, China Evergrande's total liabilities reached 2,388.2 billion yuan, and after excluding contract liabilities, there was still 1.78 trillion yuan.
After the news of the setback of overseas debt restructuring, the market was full of doubts about the prospects of Evergrande.