According to Reuters, shares of China Evergrande Group tumbled on Thursday, Jan. 27, as investors in the debt-laden developer were skeptical of the company’s thinly detailed plan to have a preliminary restructuring proposal in place in six months.
Evergrande’s shares dropped 9.6% to HK$ 1.60 (or US$ 0.205), the lowest in nearly two weeks.
On Wednesday, Jan. 25, Evergrande had a meeting with its executives and offshore creditors to find a debt restructuring solution within six months.
Evergrande’s newly-appointed executive director Siu Shawn said, “The board of directors and the risk management committee look forward to having further communications with investors and respectfully request (them) not to take any aggressive legal actions in order to maintain stability for the mutual benefits of all stakeholders”.
Himanshu Porwal, an emerging market credit analyst at Seaport Global, said, “The call turned out to be disappointing.”
“Six months is a long time for (a) draft restructuring plan.”
A creditor’s offshore group, represented by law firm Kirkland & Ellis and investment bank Moelis, said in a statement that Evergrande “has disregarded its offshore creditors and the legal rights of its creditors”. They will “seriously consider” enforcement action to protect investors’ interests.
Siu added, “We noticed there are doubts about the transparency and the restructuring process of the group, we’d like to take this opportunity to explain to all creditors that the board of directors, the risk management committee and the group will work expeditiously to stabilize the group operation”.
An offshore Evergrande bondholder said, “(I had) no expectation prior to the call and no expectation after the call… frankly speaking, I believe the final decision making is led by the government, the company is relatively passive”.
Evergrande, once China’s most prominent developer, is battling to repay creditors, suppliers, and investors in wealth management products after amassing debts of more than US$ 300 billion.