China Evergrande lays out principles for debt restructuring

Chicago, July 29 – China Evergrande Group provided information about the three guiding principles for the restructuring of its offshore debt in an announcement on Friday.

First, the company said it would respect international restructuring principles in its restructuring proposal, including the different obligors under the debt claims, the structure and seniority of the claims and the expected recovery rate for each type of debt claim. The group said it will fully consider the legal rights of the different groups of creditors and follow all relevant laws and international best practices.

Second, the group said the principle of fair treatment of creditors will be reflected in the restructuring proposal. The group will treat creditors fairly and not prefer any individual creditor.

Third, the group will arrange asset packages in compliance with the law as supplemental credit enhancement for the restructured offshore debts as appropriate. Assets may include equity interest in the offshore subsidiaries directly or indirectly held by the company.

The debts that will be covered by the proposed offshore restructuring are expected to include dollar senior notes issued by the company; dollar senior notes issued by Scenery Journey Ltd. and guaranteed by Tianji Holding Ltd. and with the benefit of keepwells provided by Hengda Real Estate Group Co. Ltd.; and other offshore debts of the company.

The company intends that the offshore restructuring proposal will cover as many of its creditors’ claims as possible, and noted that there are differences in the above types of claims.

Offshore creditors are encouraged to contact the company’s representatives: China International Capital Corp. Ltd. (Evergrande@cicc.com.cn), Houlihan Lokey (China) Ltd. (Evergrande@HL.com) and BOCI Asia Ltd. (Evergrande@bocigroup.com).

The announcement exercised a word of caution that it will take a relatively long time for the business to restore orderly operations and asset value of all stakeholders.

The real estate development company is based in Shenzhen, China.

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