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HomeBanking & FinanceChina Evergrande debt restructuring at risk from holdout creditors

China Evergrande debt restructuring at risk from holdout creditors

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China Evergrande debt restructuring fate is in the hands of secretive group of holdout creditors who need to be won over at Sept 25-26 meeting

China Evergrande Group, with US$328 billion of liabilities, has to win over holdout creditors at key creditor meetings on September 25-26 to avoid a liquidationThe world’s most indebted developer said in April that those holding more than 30 per cent have endorsed the debt plan, which is below the 75 per cent required levelBanking & financeBloombergPublished: 1:34pm, 19 Sep, 2023Why you can trust SCMP

A large but secretive group of creditors is emerging as one of the last major roadblocks to a historic restructuring of China Evergrande Group.

Identified only as “Class C” creditors by Evergrande, the group is the second-biggest of its kind with US$15 billion of claims – and among the only two that did not provide sufficient backing for the troubled developer’s debt plan based on its last public disclosure. Evergrande, which has about US$328 billion of liabilities, will have to win them over at key creditor meetings on September 25-26 as it tries to avoid a liquidation.

Still at the epicentre of China’s property crisis, Evergrande is under pressure to finalise a blueprint for what is set to be one of the country’s most complex debt restructurings. The Class C creditors pose a particular challenge, with their wide variety of borrowings and the prevalence of private debt making it hard for outsiders to identify the members and assess their attitudes.

“Failing to gather enough support for the Class C might drag the whole restructuring process,” said Zerlina Zeng, senior credit analyst with CreditSights. “We expect the debt restructuring of Chinese developers with a large amount of unfinished home projects such as Evergrande to be lengthy and with large uncertainties.”

02:06

Indebted China developer giant Evergrande downplays impact of staff arrests in Shenzhen

Indebted China developer giant Evergrande downplays impact of staff arrests in Shenzhen

Evergrande, the world’s most indebted developer, has left investors in the dark about the support level from Class C creditors since April, when it disclosed that those holding more than 30 per cent of that category of debt have endorsed the debt plan, according to people familiar with the matter who requested anonymity discussing private information.

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