OTS - China Evergrande Group- Insolvency petition against real estate conglomerate ready - International creditor and DMSA seek co-venturers filing for insolvency too (part 1)
2021. December 08. 11:30
Berlin, Germany, 8 December, 2021 (APA/OTS) - The Chinese real
estate developer China Evergrande Group once again defaulted on
overdue interest payments on December 6, 2021. The previous Friday,
the company officially admitted for the first time that it was in
the very deepest financial trouble. The debts of the real estate
giant now amount to more than $300 billion. In cooperation with
DMSA Deutsche MarktScreening Agentur GmbH, a creditor has prepared
an insolvency petition against Evergrande Holding. Now, fellow
campaigners are being sought before the application is filed with
the court.
A bondholder of China Evergrande Group, Liechtenstein-based
Financial Market Partners Capital (FMPC) Consulting AG, has been
preparing an insolvency petition against the Cayman
Islands-registered Evergrande Holding since November 22. FMPC
Consulting AG was supported and advised by DMSA Deutsche
MarktScreening Agentur GmbH, among others.
(Note for the editorial offices: More about FMPC Capital AG and
its investment in Evergrande bonds can be found at the end of this
press release).
In the meantime, the application has been completed and can be
filed at any time with the Grand Court of the Cayman Islands in
George Town. As FMPC Consulting AG sees itself as the administrator
of all international Evergrande creditors and in order to reduce
the cost risk for each applicant, the company offers other
international creditors to join its proceedings.
On Tuesday, Dec. 7, Bloomberg news agency reported two holders
of U.S. dollar bonds issued by Evergrande subsidiary Scenery
Journey said they had not received interest payments by the end of
the 30-day grace period. A total of $82.5 million in interest would
have been due no later than Dec. 6.
Previously, in the case of non-performing bonds issued by the
Evergrande conglomerate, there had been repeated reports in
international media that interest payments had been made at the
last second after all. "However, these reports were not confirmed
to us either by Evergrande itself or by the paying agents of the
bonds," explains Dr. Marco Metzler, Chairman of the Board of
Directors of FMPC Consulting AG and Senior Analyst at DMSA Deutsche
MarktScreening Agentur GmbH. "In this respect, the current
Bloomberg reports represent a further aggravation of the
situation," Dr. Metzler continued.
An aggravation with announcement: Already on Friday, December
3, Evergrande had officially admitted for the first time in a
statement to the Hong Kong Stock Exchange - the home stock exchange
of the holding company - that there was "no guarantee that the
group will have sufficient funds to continue to meet its financial
obligations".
"This official statement alone has confirmed our assessment of
the Group's absolutely desolate financial situation," explains Dr.
Marco Metzler, Chairman of the Board of Directors of FMPC
Consulting AG and Senior Analyst at DMSA Deutsche MarktScreening
Agentur GmbH. He finds the default on interest payments hardly
surprising for another reason: "We have still not received overdue
interest for our bonds - which should have been paid by November 10
at the latest. And this despite the fact that it has been widely
reported in the press that the overdue interest payments to
international investors have been made." In Dr. Metzler's view, the
official statement on December 3 and the final default on interest
payments on December 6 for the Evergrande subsidiary's bond
represent two events of default at once for all 23 outstanding
international bonds of the Evergrande conglomerate with a nominal
value of $23.7 billion. "Almost all of it will be lost," fears Dr.
Metzler.
Michael Ewy, Managing Director of DMSA Deutsche MarktScreening
Agentur GmbH, adds, "With the insolvency application we helped
prepare, we are now trying to save what can be saved for FMPC
Consulting AG and other international creditors." The fear of
financial analyst Metzler: "Evergrande is insolvent, but officially
not yet insolvent. With the default on a bond now confirmed in the
press for the first time, the management of the Evergrande holding
company must file for insolvency if it does not want to be guilty
of dragging its feet. However, since this application has not yet
been made, we - the DMSA and FMPC Consulting - are concerned that
assets may be removed from the insolvency estate."
"In view of all these developments, it was right to start
preparing an insolvency petition against Evergrande already at the
end of November ", explains Dr. Marco Metzler in his capacity as
Chairman of the Board of Directors of FMPC Consulting AG. He
invites affected international investors to join the application.
The application is to be filed with the competent court in George
Town within the next few days.
Upon acceptance of the insolvency petition, an insolvency
administrator will begin winding up the Evergrande Group and
liquidating the assets for investors and creditors. "The prices of
all Evergrande securities - stocks and bonds alike - will fall to
virtually zero in the process," predicts senior analyst Metzler.
"But all distressed sales beginning with the filing date can then
also be reversed."
However, DMSA senior analyst Metzler believes there is little
hope for Evergrande's turnaround. "The restructuring analysis by
Fitch Ratings - my former employer and one of the three largest
rating agencies in the world - assumes that Evergrande would be
liquidated at a restructuring rate of zero to ten percent." That
means creditors would get back a maximum of one-tenth of the
capital they invested, if access to assets in China is even
possible. (continues)