Suggest canceling the relevant meetings for restructuring!, Evergrande mutation

On the evening of September 22nd, China Evergrande announced that the company's scheduled meeting on the proposed restructuring agreement on September 25th and 26th would not be held, mainly due to lower than expected sales since March 22nd.

On March 22nd, China Evergrande released a debt restructuring plan, which includes the "Evergrande Agreement Arrangement", "Jingcheng Agreement Arrangement", and "Tianji Agreement Arrangement".

On August 27th, China Evergrande released an unaudited interim performance announcement, which showed that the company was actively planning to resume sales, resulting in a significant increase in sales performance compared to the previous period. It was steadily advancing the work related to overseas debt restructuring and signed an overseas restructuring support agreement with creditors in April.

The question is, is it the sudden change in sales at China Evergrande from June 30th to September 22nd, or has the sales situation been poor since March 22nd?

Less than a month, sales situation suddenly changed

Who would have thought that less than a month ago, China Evergrande had sent a positive signal to the outside world.

On August 27th, China Evergrande released an unaudited interim performance announcement, which showed that the company actively planned to resume sales and successfully seized the small spring of the real estate market that appeared at the beginning of the year. Sales performance achieved a significant increase compared to the previous year, and always prioritized stable operation and risk reduction, fully committed to ensuring the delivery of properties.

At the same time, China Evergrande, based on the principles of respecting international restructuring practices and treating the rights and demands of all creditors fairly and justly, has steadily promoted the relevant work of overseas debt restructuring. In April, it signed an overseas restructuring support agreement with creditors.

The sales situation from June 30th to September 22nd has not been disclosed by China Evergrande, but in its unaudited interim performance announcement, it provided relatively optimistic sales data.

As of June 30, 2023, China Evergrande has a land reserve of 190 million square meters and has participated in 78 old renovation projects, including 55 in the Greater Bay Area and 23 in other cities.

In terms of contract sales, in the first half of 2023, China Evergrande achieved a contract sales amount of 33.413 billion yuan, a contract sales area of 5.115 million square meters, and a cumulative sales revenue of 27.1 billion yuan.

In the unaudited mid-term performance, China Evergrande looks forward to the future, stating that it will firmly assume the main responsibility of self rescue insurance and solidly do a good job in various specific work related to building insurance delivery; Accelerate the promotion of overseas debt restructuring and other work to safeguard the long-term interests of various creditors.

On the evening of September 22nd, China Evergrande announced that the cancellation of the debt restructuring meeting was mainly due to the company's sales performance not meeting expectations since March 22nd.

Previously two extensions

On March 22nd, China Evergrande announced its overseas debt restructuring plan.

Among them, China Evergrande plans to carry out the proposed restructuring of the "Evergrande Agreement Arrangement" through agreement arrangements in applicable jurisdictions such as the Cayman Islands and Hong Kong. Under the Evergrande agreement, there will be two sets of debts, namely Group A and Group C.

Jingcheng Agreement Arrangement refers to Jingcheng Limited's plan to implement restructuring through an agreement arrangement in the British Virgin Islands, including the issuance of four senior notes denominated in US dollars by Jingcheng.

Each Jingcheng creditor will receive a proportionate allocation of new notes with a total principal amount of 6.5 billion US dollars issued by Jingcheng according to their rights.

In the space-based agreement arrangement, creditors will receive four new notes issued by space-based Holdings Limited, with a term of 5 to 8 years and a total principal amount of 800 million US dollars.

On July 26th, China Evergrande announced that the Evergrande agreement was scheduled for August 23rd, while the space-based agreement and Jingcheng agreement were scheduled for August 22nd.

On August 16th, China Evergrande postponed the above-mentioned meeting for the first time until August 28th.

On August 28th, China Evergrande announced that it had agreed to postpone the meeting to September 26th.

In order to ensure consistency in the scheduling of meetings for the Evergrande Agreement, Jingcheng Agreement, and Space-based Agreement as much as possible, the Jingcheng Agreement and Space-based Agreement scheduling meetings will be postponed to September 25th.

Less than a month, the reasons have greatly changed

Even more strangely, on the eve of the cancellation of the aforementioned meeting, China Evergrande postponed the hearing of the agreement.

On the evening of September 8th, China Evergrande announced that the approval hearings for the Jingcheng Agreement, the Cayman Islands Evergrande Agreement, Hong Kong Evergrande, and the Space-based Agreement were postponed to the evening of October 3rd, October 5th, October 16th, and 17th, respectively.

The reporter noticed that the approval hearing of China Evergrande's agreement has been postponed to early October, which is a prerequisite for the effective date of its restructuring to occur in early November.

Compared to the fact that the cancellation of this meeting resulted in lower than expected sales, China Evergrande has listed three reasons for the postponement of the second meeting.

Firstly, China Evergrande has recently postponed a series of overseas debt restructuring meetings and hearings, requiring creditors to have more time to understand the restructuring procedures and agreement arrangements, in order to maximize their participation in the restructuring.

Secondly, China Evergrande's stock resumed trading on August 28th and creditors need to be given time to consider the impact of recent developments in China Evergrande on restructuring and agreement arrangements.

Thirdly, China Evergrande had previously applied to the New York court for reorganization recognition procedures under Chapter 15 of the United States Code, which was mistakenly interpreted by the outside world as proposing bankruptcy protection related matters.

At that time, China Evergrande repeatedly emphasized that the postponement of the relevant meetings of the aforementioned agreement was still within the final deadline, which met the expectations of creditors in the arrangement for the implementation of the proposed restructuring.

Rongchuang takes the lead

Unlike China Evergrande, Rongchuang China has made phased progress.

On the evening of September 18th, Rongchuang China announced that its overseas debt restructuring had received high approval, with a approval rate of 99.75% for the number of creditors and 98.3% for the total debt.

Rongchuang China announced that the company will seek court approval and ruling on the plan. The application for seeking a ruling plan will be heard at 9:30 am on October 5th.

At this point, Rongchuang China's overseas debt restructuring has entered a critical moment.

On September 19th, Rongchuang China applied for Chapter 15 certification from a US court regarding the restructuring of US dollar bonds, and has received recognition from the US court for its agreement to arrange the restructuring in Hong Kong, China.

Industry insiders analyze that corporate bankruptcy protection has been recognized by the court, which will temporarily prohibit creditors from taking measures to recover the property they owned before the bankruptcy application, and also temporarily prohibit legal proceedings against debtors. Creditors seeking debt require authorization from the bankruptcy court, which has a positive impact on the overall debt restructuring of the enterprise.

The Shanghai Securities News reporter noticed that China Evergrande has also made the above-mentioned application recently, but it is believed to have applied for bankruptcy liquidation by the outside world, and relevant clarifications have been made afterwards.

Unlike Rongchuang China, which applies for Chapter 15 certification after determining the overseas debt restructuring, China Evergrande is still negotiating the timing of the relevant meeting for the overseas debt restructuring.