China Evergrande reports steep losses for 2021 and 2022, offers update on offshore debt restructuring
South China Morning Post
Mon, July 17, 2023
China Evergrande Group, the world's most indebted developer, reported heavy losses for the past two years ahead of a proposed offshore debt restructuring plan that could allow it to resume normal operations.
The Guangzhou-based company, whose Hong Kong-listed shares have been suspended from trading since March 21, 2022, posted a net loss attributable to shareholders of 476 billion yuan (US$66.3 billion) for 2021, and narrowed it down to 105.9 billion yuan in 2022, according to its exchange filings late on Monday. It had posted a net profit of 8.1 billion yuan in 2020.
The group's total liabilities stood at 2.43 trillion yuan at the end of last year. The company's borrowings rose to 612.39 billion yuan, from 607.38 billion yuan in 2021, according to its filings.
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The company also provided an update on the proposed restructuring of its offshore debt. A hearing for the proposed scheme to be implemented by Evergrande is expected to be heard in the Hong Kong High Court on July 24 at 11.30am. Similar hearings will be held in the Eastern Caribbean Supreme Court on July 24 and in the Cayman Islands on July 25.
Residential buildings developed by China Evergrande Group in Shanghai.
A successful restructuring of the company's overdue offshore bonds is an important step for Evergrande to remain as a going concern and maintain its Hong Kong listing. Regulations require the company to release its results before it can unveil the debt restructuring proposal.
"A debt restructuring will not necessarily result in the rebirth of Evergrande," said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai. "Additional financing is needed to support its operations."
Evergrande also faces 1,519 cases and unresolved lawsuits involving a combined sum of 395.39.6 billion yuan as of end December, according to its filings.
The restructuring is a do-or-die moment for Evergrande, controlled by embattled Chinese tycoon Hui Ka-yan, because the company could be delisted if the Hong Kong shares remain suspended for 18 months.
Evergrande was the main victim of Beijing's clampdown on the red hot property market after the government introduced the "three red lines" policy to reduce developers' leverage.
Since late 2021 the Guangzhou-based developer has been struggling to complete projects and repay its suppliers and creditors.
Evergrande's contracted sales fell to 31.7 billion yuan in 2022, from 443 billion yuan in 2021. In 2020 sales stood at 723 billion yuan. As of end December 2022, there were a total of 1,241 projects at different stages of construction and completion, it said in the filing.
On Monday, Fu Linghui, a spokesman for the National Bureau of Statistics, told a press conference in Beijing that the country's property market would be back on track after the clean-up campaign to de-leverage some debt-ridden developers comes to an end.
About 50 mainland developers have defaulted on some US$100 billion worth of offshore bonds over the past two years, according to a JPMorgan report in December, with 39 of them seeking restructuring plans with creditors for US$117 billion of stressed debt.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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