Evergrande's creditors get impatient

 Evergrande's creditors get impatient

A group of bondholders of a Chinese real estate firm threatened to take legal action over the "ambiguous" debt restructuring process.

In a statement on January 20, the group said it was "considering serious legal measures" after Evergrande was unable to actively discuss with them the restructuring of its operations. "The company's lack of commitment and opaque decision-making to date is contrary to international standards for restructuring," the group said.

The company's conduct has thus "reduced foreign investors' confidence" in being treated fairly when investing in a Chinese company. The group is "ready to do what is necessary to protect legitimate rights and interests".

Evergrande declined to comment for this information. However, in a document submitted to the Hong Kong Stock Exchange, Evergrande said it would hire more legal and financial advisers to "follow up" the creditors' requests.

A project under construction by Evergrande in China. Photo: Reuters

A project under construction by Evergrande in China. Photo: Reuters

Evergrande is one of China's largest real estate firms and is still saddled with more than $300 billion in debt. That includes about $19 billion in bonds issued abroad, currently held by specialized senior bank and investment fund managers.

Evergrande has been scrambling to raise cash to pay creditors for months now. Chairman Hui Ka Yan is said to have had to sell off his personal assets to save the company.

However, this company's time is running out. Last month, Fitch Ratings declared the company insolvent after failing to pay interest on two lots of USD-denominated bonds.

There is ample evidence that the Chinese government is helping Evergrande restructure its debt. The company set up a risk management committee last month, staffed by state-owned company officials in Guangdong, where it is headquartered. The committee also includes a leader from the government's bad debt management company.

However, international creditors said they were not informed about the company's plans. In a statement yesterday, they said they tried to talk to Evergrande, but received "vague commitments, lacking meaning and detail". The group said it acknowledges Evergrande's recent efforts to restart construction projects and only wants to "participate in some support" to help the company "get through difficult times".