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China Evergrande's snowballing debt crisis

Stock MarketsDec 07, 2021 03:36AM ET
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© Reuters. Logos of China Evergrande are seen on taps outside China Evergrande Centre building in Hong Kong, China December 7, 2021. REUTERS/Tyrone Siu

HONG KONG (Reuters) -Some offshore bondholders of China Evergrande Group did not receive coupon payments by the end of a 30-day grace period, four people with knowledge of the matter said, pushing the cash-strapped property developer closer to formal default.

Failure to make $82.5 million in interest payments that were due last month would trigger cross-default on the firm's roughly $19 billion of international bonds and put the developer at risk of becoming China's biggest-ever defaulter.

Here is a timeline of events of how Evergrande's debt crisis has unfolded:

August 2020

Regulators meet with Evergrande and other developers to introduce caps for three debt ratios in a scheme dubbed the "three red lines".

Evergrande sells a $3 billion stake in its property management unit ahead of the unit's initial public offering (IPO). It asks the Guangdong provincial government to approve a Shenzhen backdoor listing of the unit that has languished for four years, saying it could otherwise face a cash crunch.

September 2020

Evergrande offers 30% discount on properties for a month to push sales.

October 2020

Evergrande raises $555 million in a slimmed-down secondary share sale in Hong Kong.

November 2020

Evergrande terminates the Shenzhen backdoor listing plan. Some strategic investors agree not to demand repayment.

Evergrande Property Services Group Ltd's Hong Kong IPO raises $1.8 billion.

January 2021

China Evergrande New Energy Vehicle Group Ltd raises $3.4 billion by bringing in six new investors.

March 2021

Evergrande sells a $2.10 billion stake in online real estate and automobile marketplace Fangchebao to 17 investors in a pre-IPO deal. It aims to meet its three debt-ratio caps by year-end, list Fangchebao by early the following year and spin off several units.

June 2021

Evergrande says it will sell a $386 million stake in peer China Calxon Group Co Ltd.

The developer arranges HK$13.6 billion ($1.74 billion) to repay a maturing bond and interest on dollar bonds.

Evergrande achieves one debt cap, cutting interest-bearing debt to around 570 billion yuan from 716.5 billion yuan ($89.47 billion from $112.47 billion) six months earlier.

July 2021

A court orders a freeze on a 132 million yuan bank deposit held by Evergrande at the request of China Guangfa Bank Co Ltd over a loan extended to the developer. Evergrande says the loan is not due until March and plans to take legal action.

Some banks in Hong Kong decline to extend new loans to buyers of two of Evergrande's uncompleted residential projects.

August 2021

Evergrande agrees to sell stakes in internet unit HengTen Networks Group Ltd worth HK$3.25 billion.

The Guangzhou Intermediate People's Court centralises lawsuits against Evergrande nationwide, sources say.

Evergrande says it is in talks to sell stakes in Evergrande New Energy Vehicle and Evergrande Property Services.

State media reports construction has been halted on two Evergrande projects in Kunming, one for overdue payments.

Hui Ka Yan steps down as chairman of flagship unit Hengda Real Estate Group.

China's central bank and banking watchdog summon senior executives, issuing a rare warning that Evergrande must reduce its debt risk and prioritise stability.

Evergrande warns of liquidity and default risks if it fails to resume construction, dispose of assets and renew loans, as it reports a 29% year-on-year decline in net profit.

September 2021

Chairman Hui promises buyers Evergrande will complete construction of their homes.

It requests an extension on trust-loan interest payments to creditors including CITIC Trust.

Hui vows to repay all of Evergrande's matured wealth management products as soon as possible. Investors crowd the lobby of Evergrande's Shenzhen headquarters to demand repayment of loans.

Evergrande says online speculation about bankruptcy and restructuring was "totally untrue" but acknowledges "unprecedented difficulties".

It says it has engaged financial advisers to examine its options, warning of cross-default risks amid plunging property sales.

Hui says helping retail investors redeem investment products is a top priority.

Evergrande says it had "resolved" a coupon payment on an onshore bond but then misses payments on Sept. 23 and Sept. 29 deadlines to pay $131 million dollar coupons.

Chinese Estates Holdings Ltd, Evergrande's second-biggest shareholder, says it plans to exit its holding. The EV unit warns it faces an uncertain future unless it gets a swift cash injection.

Evergrande says it will raise 9.99 billion yuan selling Shengjing Bank Co Ltd shares.

October 2021

Advisers of some Evergrande dollar bondholders - investment bank Moelis (NYSE:MC) & Co and law firm Kirkland & Ellis - say they want more information and transparency.

Evergrande misses $148 million in coupon payments due Oct. 11.

Hong Kong's audit regulator says it is investigating Evergrande's 2020 accounts and audit by PwC.

Reuters reports state-owned Yuexiu Property Co Ltd pulled out of a proposed $1.7 billion deal to buy Evergrande's Hong Kong headquarters building.

Evergrande pays a 121.8 million yuan onshore bond coupon, sources say.

China's vice premier, central bank and banking and securities watchdogs seek to reassure markets that spillover effects on the banking system and real estate sector from Evergrande's debt problems are controllable.

Evergrande abandons plans to sell a $2.6 billion stake in the services unit to rival Hopson Development Holdings Ltd.

A defaulted private bond guaranteed by Evergrande, Jumbo Fortune Bond, secures a three-month-plus extension, REDD reports.

Evergrande remits funds for a dollar bond coupon that was due Sept. 23 to avoid default before the 30-day grace period expires, a source says.

November 2021

Britain-based e-mobility firm Bedeo says it has acquired Protean Electric from Evergrande's automotive unit.

Evergrande once again averts a destabilising default with a last-minute bond payment.

Evergrande says it is selling its entire stake in streaming services firm HengTen for $274 million.

Evergrande's electric vehicle division says the unit is raising about $347 million from a share sale to fund production of new-energy cars.

A government body takes over Evergrande's soccer stadium with a view to selling it, Reuters reports.

Chairman Hui sells 1.2 billion shares worth a total of HK$2.68 billion ($344 million), lowering its stake in the Shenzhen-based real estate company to 67.9% from 77%.

December 2021

China's Guangdong province summons Evergrande's chairman after the developer said there was "no guarantee" it would have enough funds to meet debt repayments, while regulators sought to reassure markets.

Evergrande sets up a risk management committee as it inches closer to a debt restructuring.

($1 = 7.8006 Hong Kong dollars)

($1 = 6.3708 Chinese yuan renminbi)

China Evergrande's snowballing debt crisis

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