Embattled property developer China Evergrande Group aims to win creditors' approval for its debt restructuring proposals by as early as the end of February, the company's lawyers said Monday.
Once China's top-selling developer, Evergrande is now at the center of the country's property crisis. Its $22.7 billion of offshore debt, including loans and private bonds, is deemed to be in default after missed payments late last year.
With few fresh funding options and slowing property sales, Evergrande, which has $300 billion in total liabilities, began one of China's biggest debt-restructuring processes this year.
Evergrande expects to firm up debt restructuring proposals by the end of February or early March, lawyers for the developer told a Hong Kong court, which adjourned a winding-up lawsuit against the developer to March 20, 2023.
Reuters reported earlier this month that Evergrande would sign non-disclosure pacts with bondholders in November to prepare for negotiations in December, with terms to be finalized early next year, citing a source with knowledge of the matter.
An investor in Evergrande unit Fangchebao, an online real estate and automobile marketplace, filed the winding-up petition against the embattled property developer in June because it had not honored an agreement to repurchase shares the investor bought in FCB.
Evergrande and its major offshore credit group have expressed their opposition to the winding-up petition, saying the developer was actively pushing forward with the offshore debt restructuring work in the interest of all creditors.
A lawyer representing the petitioner said Evergrande has not involved his client in the restructuring discussions and they have no information on the process. Evergrande's lawyer said the firm plans to work out a proposal before sharing it with all of the creditors.
During Monday's hearing, Judge Linda Chan said Evergrande would need to convey "something much more concrete" on its debt revamp process by the next hearing. She directed Evergrande to file a progress report on the restructuring process 14 days ahead of the next hearing.
As part of options being considered for the restructuring proposal, Evergrande is looking at using domestic assets and offering them as additional credit enhancement to secure offshore creditor approval, sources have told Reuters.
Offshore, its major assets in Hong Kong have been taken over by creditors.
Sold land plot for $1 billion
In what could potentially cast a shadow over its plan to use onshore assets as sweeteners for bondholders, a public filing showed on Saturday that a land plot owned by Evergrande has been sold.
The 10,377-square-meter (111,700-square-foot) land in Nanshan district was sold to Shenzhen Anhe No. 1 Real Estate Development Co. for 7.5 billion yuan ($1.04 billion), according to land transaction records published by the city's Public Resource Exchange Center.
Evergrande purchased the land for 5.6 billion yuan in 2017 and planned to develop it into the group's headquarters, Reuters previously reported.
The project has been suspended since September 2021, Chinese media outlet Caijing reported on Monday.
Evergrande has scrambled to offload assets in recent months and its financial situation has worsened considerably since last year.
Its troubles are emblematic of the crisis rippling across China's massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash after Beijing imposed widespread lending curbs in 2020.
Major developers including Evergrande have failed to complete projects, sparking mortgage boycotts and protests from homebuyers.
China's banking regulator earlier this month unveiled sweeping measures to support the property sector, including credit support for distressed developers to ensure the completion and handover of projects to homeowners.
A spokesperson for Evergrande declined to comment.