China’s real estate debt crisis continues to spread. Recently, Evergrande Real Estate Group announced that its subsidiary failed to pay interest on three matured promissory notes, totaling $147 million.
On the evening of August 11th, Evergrande Real Estate Group, listed in Hong Kong, announced on the Hong Kong Stock Exchange that its subsidiary, Enjoytoday Limited, failed to pay interest on three senior notes issued overseas that were due for cash payment on July 11th this year, with a 30-day grace period. Due to the cash flow pressure faced by the group, it has been unable to pay the interest in cash until now. The total interest due amounts to $147 million.
Evergrande Real Estate stated that failure to pay interest on Enjoytoday notes may lead to demands from noteholders for accelerated repayment. The company is in discussions with noteholders to find an amicable solution, closely monitoring developments and considering all possible actions, including but not limited to developing a comprehensive debt management plan for the group’s foreign debt.
The announcement mentioned that the company will explore feasible solutions with consultants to ensure fair treatment of all creditors. The group looks forward to engaging with creditors to seek their support and cooperation in achieving a comprehensive solution to address the group’s foreign debt issues and weather challenges facing the entire industry.
To develop a comprehensive debt management plan for the group’s foreign debt, Evergrande Real Estate has engaged ANM Financing Consultants Limited as financial advisor and instructed Shengde Law Firm as legal advisor.
Earlier on the 7th and 8th of the month, Evergrande Real Estate’s wholly-owned subsidiary, Zhaohui Limited, received a winding-up petition filed by Seatown Private Credit Master Fund in the High Court of the Hong Kong Special Administrative Region. The petition involves the subsidiary’s failure to repay the loan principal amount proportionally owned by the petitioner as well as interest payable of approximately $614 million. The petition will be heard on September 25th.
Established in 1994 and headquartered in Guangzhou, Evergrande Real Estate Group went public in Hong Kong in 2005. It was once praised as one of the “Five Tigers of South China” in the real estate industry.