Evergrande mutated, it is recommended that the relevant meeting of reorganization be cancelled!

On the evening of September 22, China Evergrande announced that the company’s original September 25 and September 26 meetings on the relevant agreement arrangements for the proposed restructuring will not be held, mainly because the sales situation has been lower than expected since March 22.

On March 22, China Evergrande released a workout plan, and the proposed restructuring includes the "Evergrande Agreement Arrangement", the "Jingcheng Agreement Arrangement" and the "Space-based Agreement Arrangement".

On August 27, China Evergrande released an unaudited interim results announcement, indicating that the company actively planned to resume sales, with a significant increase in sales performance, steadily advancing work related to overseas debt restructuring, and signed an overseas restructuring support agreement with creditors in April.

So here’s the problem.Was it the sudden change in China Evergrande’s sales from June 30 to September 22, or has it been poor since March 22?

In less than a month, the sales situation suddenly changed

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

On August 27, China Evergrande released an unaudited interim performance announcement, indicating that the company actively planned to resume sales, successfully seized the property market Xiaoyangchun that emerged at the beginning of the year, and achieved a significant increase in sales performance. It has always taken stable management and risk reduction as its top priority, and has made every effort to ensure the construction of the building.

At the same time, in line with the principles of respecting international restructuring practices, treating the rights and demands of all creditors with justice and fairness, China Evergrande has steadily advanced the work related to overseas debt restructuring, and signed an overseas restructuring support agreement with creditors in April.

China Evergrande has not disclosed sales from June 30 to September 22, but it gave "optimistic" sales figures in its unaudited interim results announcement.

As of June 30, 2023, China Evergrande had a land reserve of 190 million square meters and participated in 78 old renovation projects, including 55 in the Greater Bay Area (34 in Shenzhen) 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 refund of 27.10 billion yuan.

In the unaudited interim results, China Evergrande looks to the future, saying that it will resolutely assume the main responsibility of self-rescue insurance, do a solid job in the specific work of guaranteeing the delivery of buildings, and accelerate the restructuring of overseas debt to protect the long-term interests of various creditors.

On the evening of September 22, China Evergrande announced that it had cancelled the relevant meetings of the workout, mainly because the company’s sales were not as good as expected since March 22.

The previous two extensions

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

Among them, China Evergrande intends to carry out the proposed restructuring of the "Evergrande Agreement Arrangement" through the agreement arrangement in the Cayman Islands, Hong Kong and other applicable jurisdictions. Evergrande’s agreement arrangement will have two sets of liabilities, namely Group A and Group C.

The Jingcheng Agreement Arrangement means that Jingcheng Limited plans to implement a reorganization through an agreement arrangement in the British Virgin Islands, including the issuance of four US dollar-denominated senior notes by Jingcheng.

Each Jingcheng creditor will be allocated a pro rata allocation of new notes issued by Jingcheng with a total principal amount of US $6.50 billion.

Under the space-based arrangement, creditors will receive four new notes issued by space-based holdings limited with a term of five to eight years and a total principal amount of $800 million.

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

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

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

In order to maintain as much consistency as possible between the scheduling meetings of the Evergrande Agreement, the Scenic Agreement, and the Space-based Agreement, the Scenic Agreement scheduling meeting and the Space-based Agreement scheduling meeting will be postponed to September 25.

In less than a month, the reason has changed dramatically

What is even more bizarre is that on the eve of the cancellation of the above-mentioned meeting, China Evergrande confirmed that the hearing time of the agreement was postponed.

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

The reporter noticed that China Evergrande’s agreement to extend the approval hearing to early October is a prerequisite for its reorganization to take effect in early November.

Compared with the cancellation of the meeting, sales were lower than expected. China Evergrande listed three reasons for the postponement of the second meeting.

First, China Evergrande’s recent series of overseas workout meetings and hearings have been postponed, which needs to give creditors more time to understand the terms of the reorganization procedures and agreement arrangements, so as to maximize creditors’ participation in the reorganization.

Second, China Evergrande shares have resumed trading on August 28, and creditors need to be given time to consider the impact of recent new developments in China Evergrande on restructuring and agreement arrangements.

Third, China Evergrande previously applied to the New York court for reorganization approval procedures under Chapter 15 of the United States Code, which was mistakenly interpreted by the outside world as a matter related to bankruptcy protection.

At that time, China Evergrande repeatedly stressed that the extension of the relevant meeting of the above agreement was still within the deadline (December 15), in line with the expectations of the creditors of the agreement to implement the proposed restructuring.

Sunac is one step ahead

Unlike China Evergrande, Sunac China has made progress in stages.

On the evening of September 18, Sunac China announced that the company’s overseas workout was approved with a high pass rate of 99.75% for the number of creditors and 98.3% for the total amount of debt.

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

At this point, Sunac China’s overseas workout has entered a critical moment.

On September 19, Sunac China applied for Chapter 15 certification in the US court for the restructuring of US dollar debt, and has been recognized by the US court for its restructuring agreement in the Hong Kong court of China.

According to industry analysts, the bankruptcy protection of enterprises is recognized by the court, which will temporarily prohibit creditors from taking measures to recover the property owned before the bankruptcy application, and also temporarily prohibit legal proceedings against debtors. Creditors need the authorization of the bankruptcy court to claim debts, which has a positive impact on the overall workout of enterprises.

The Shanghai Securities News reporter noticed that China Evergrande also made the above application recently, but was considered by the outside world to have applied for bankruptcy liquidation, and then made relevant clarifications.

Unlike Sunac China, which made the above application after confirming the overseas workout, China Evergrande is still negotiating the time for the overseas workout to hold relevant meetings when applying for Chapter 15 certification to the US court.