The Chinese government is convening a team of accountants and legal experts to review the assets of China Evergrande Group, which could be a catalyst for the re-establishment of a global debtor.
Officials in the Guangdong district of Evergrande sent a team last month from King & Wood Mallesons, a law firm whose work involved restructuring, two people familiar with the matter said, requesting anonymity in private talks. Encouraged by Beijing, district officials are also sending additional financial advisors and accountants to review the developer, said one of the participants.
The move also adds to the signs that Chinese authorities have laid the groundwork for one of the country’s biggest debt repayments. While senior executives in Beijing have not yet said whether they will allow Evergrande’s creditors to be severely damaged, debtors are spending less money. Guangdong officials have rejected a single request from Evergrande billionaire Hui Ka Yan, who has a price control, said one source.
On Tuesday, Evergrande said the company had hired their consultants, Houlihan Lokey and Admiralty Harbor Capital, to “re-evaluate the status of their headquarters” and get a positive response from all participants. The revelations came in exchange for the company’s current situation, with Evergrande warning that it was facing “serious” challenges.
The company’s shares fell to 12% in Hong Kong, which increased this year to 80% and closed sharply since November 2014. The Evergrande government of 8.25% since 2022 fell by almost 5.5 cents to 27 cents, at higher fixed rates, according to prices combined with Bloomberg.
The growing challenge for Hui and Chinese officials to find a solution to a months-long crisis that has grown significantly in recent days. The developer is missing out on a commitment to donors, stockbrokers and real estate buyers, raising the bar after a series of demonstrations at Evergrande’s Chinese offices. Opponents rallied at the company’s headquarters in Shenzhen for the third day in a row on Tuesday, boldly demanding a refund for delayed economic activities.
The amount of losses they face depends a bit on whether Chinese authorities and state-owned banks have taken steps to reduce the collapse. Evergrande, which has a debt of nearly $ 300 billion, has been seen as a major test in President Xi Jinping’s bid to allow heavily indebted companies to fail as they try to raise more than $ 54 trillion in China’s $ 100 trillion economy.
Without government intervention, the risk is that Evergrande will start to decline. The manufacturer said in a statement Tuesday that sales will fall in a fixed month in September due to a lack of confidence among home buyers, who often need to give the company more money that could take years to complete.
Evergrande said it had not made much progress in planning to sell car and property prices, adding that the loss of a home in Hong Kong has not been completed as expected. The sale of goods was one of the most important factors in the design of Evergrande in order to escape its costs.
The Guangdong government has urged Evergrande’s central banks to set up a credit committee, which would allow lenders to make major decisions in addition to losing assets, two experts said. Banks are suspicious of this until it has been properly named by state officials, people say.
China’s Financial Stability and Development Committee, the country’s chief financial officer, blessed Evergrande’s plan last month to reconsider payday loans with banks and other low-income lenders, a source told Bloomberg last week. It is unknown at this time what he will do after leaving the post.
Evergrande, which denied rumors on Monday and later on Monday that it would pay the fine, said on Tuesday that Houlihan Lokey and Admiralty Harbor Capital “should explore all possible solutions to the problem.”
Houlihan Lokey has one of the biggest financial reforms in the world, advising on 1,400 cases involving more than $ 3 trillion in debt since 1988, according to his website. His biggest story is Lehman Brothers Holdings Inc.
King & Wood, a law firm based in Guangdong province, is one of China’s leading financial services providers. Major lawsuits have been filed against HNA Group, Brilliance Auto Group Holdings Co. and China Fortune Land Development Co.
“It seems he is working on debt restructuring after there are no real consequences of financial losses, and the first task is to establish those with financial resources that can be difficult for the public,” said Daniel Fan, a credit researcher at Bloomberg Intelligence. “It seems that the developer is planning to restructure a lot of debt, and the next step is to do the same for retailers abroad.”
Evergrande, Guangdong government and King & Wood did not respond.
While the developer has no debt until 2022, he faces $ 669 million in coupon payments this year, plus $ 83.5 million due to Sept. 23 of the note. Fitch Ratings cited a higher interest rate option as it reduced Evergrande’s count last week.
“It would be extremely difficult for Evergrande to pay for offshore,” said Howe Chung Wan, Asia’s chief financial officer at Principal Global Investors. “It seems to us the first thing now to be a systematic review and a systematic review of grievances.”