Evergrande Offers Sweetener for Debt Revamp as China Property Crisis Worsens

China Evergrande Group will offer its offshore creditors asset packages that may include shares in two overseas-listed units as a sweetener, the developer said on Friday, as a stifling liquidity crisis in the property sector continues, Reuters reported. The two listed units are Evergrande Property Services Group Ltd and electric vehicle maker China Evergrande New Energy Vehicle Group Ltd, the embattled developer said in an update on its preliminary restructuring proposal, a move that was widely expected by creditors. Evergrande's restructuring proposal, which was thin in details, comes as China's property sector, a key pillar for the world's second-largest economy, lurches from one crisis to another. The sector has seen a string of debt defaults by cash-squeezed developers. With more than $300 billion in liabilities, Evergrande, once China's top-selling developer has been at the centre of the crisis and its debt restructuring plan is seen as a possible template for others. A person familiar with the restructuring plan separately told Reuters Evergrande aimed to wrap up group due diligence work next month before starting negotiations with creditors on specific terms. Read more.

In related news, struggling Chinese developer Evergrande Group is selling its Hong Kong headquarters via a tendering process that ended on Thursday, a source with direct knowledge said, and local developer CK Asset confirmed it has bid for it, Reuters reported. With more than $300 billion in liabilities, Evergrande has been trying to sell its 26-storey China Evergrande Centre in Hong Kong's Wan Chai district after a potential $1.7 billion deal collapsed late last year, as part of the asset disposal effort to raise fund. The sale proceeds of the Hong Kong tower would be used to repay offshore creditors as part of the debt restructuring plan that is expected to be announced this week, sources have said. Several Hong Kong developers have submitted tenders, the source told Reuters, while there was little participation from Chinese state-owned players. Evergrande recently appointed real estate services group Cushman & Wakefield as the sole agent to sell the 345,000 square foot office building, the Financial Times reported on Thursday, citing sources, and the sale was expected to fetch a much lower figure this time, closer to HK$9 billion ($1.15 billion). CK Asset, founded by billionaire Li Ka-shing, said in an emailed statement on Thursday it has submitted a tender for China Evergrande Centre. Reuters reported in October, citing sources, that Chinese state-owned Yuexiu Property (0123.HK) pulled out of a proposed $1.7 billion deal to buy China Evergrande Center over worries about the developer's dire financial situation. Read more.

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