Evergrande, mired in the mire, finally sent a positive signal, although the debt of 2 trillion is only a drop in the bucket.
On the evening of February 25, the company announced that it would sell the relevant equity of four projects to Everbright trust and Minmetals trust, so as to recover the early investment of 1.95 billion yuan and resolve the debt involved in the project of about 7.01 billion yuan. After taking over the four projects, the trust will inject capital into the projects as needed and be directly responsible for the follow-up operation and management. After the project realizes the income, it will be used to repay the early-stage investment and additional investment of the trust.
Minmetals trust also responded to the media that its primary goal is to safeguard the interests of investors, seek a solution path, and promote the normal operation of the project by obtaining all the equity and management rights of the project company, which is the best solution to the problems of Evergrande project at present.
trust turns into “developer”
The announcement said that Evergrande Chongqing and Dongguan projects cooperated with Everbright trust, and Foshan and Guangzhou Nansha projects signed agreements with Minmetals trust. From the perspective of operation mode, the direct transformation of trust institutions into “developers” is a relatively novel and seemingly win-win attempt to resolve debt.
After taking over the four projects, the trust will be responsible for investing the funds required for development and construction into the relevant projects according to the actual needs, and will take over the operation and management of the project company. When the relevant projects realize the income, the income will be used to repay the investment of the trust (including any investment in relevant projects before and after the takeover), and the surplus will be used to repay the early capital investment of Evergrande. The trust institution shall not actually participate in the profit distribution of the project as a shareholder.
After repaying the investment of the trust institution, Evergrande can exercise the right to require the trust institution to transfer 100% interests in relevant projects at zero consideration. If Evergrande chooses not to exercise the repurchase right, the relevant project company will continue to be managed by the trust institution, and 5% of the annual profits of the relevant project company will be distributed to the trust institution, and the balance will be distributed to Evergrande. In addition, Hengda will retain the financial supervision right and sales co pricing right of the project.
The two trust institutions promise that no matter whether the relevant project company can repay the investment of the trust institution, the trust institution will strive to ensure the completion of relevant project development and completion of building delivery. Through this cooperation with the trust institution, Evergrande can recover about 1.95 billion yuan of the early-stage investment in the project and resolve about 7.01 billion yuan of the debt involved in the project. The recovered investment will be used for the guaranteed delivery of buildings and general working capital of other projects of the company.
On February 6 this year, Evergrande group held a mobilization meeting for the new year’s commencement of the guaranteed delivery building in 2022. Xu Jiayin said at the meeting, “this year, we must start to ensure the delivery of buildings in an all-round way and unswervingly complete the goal of ensuring the delivery of buildings throughout the year, which is the most important task and work this year. At the same time, we should try our best to resume sales and business, actively promote cooperation in an all-round way and strive to resolve various risks.” At present, it seems that some positive signals are indeed emerging.
Minmetals Trust: the best scheme after repeated demonstration
Evergrande said in the announcement, “The group’s liquidity problem has a negative impact on the development and progress of the project. This cooperation with the trust can ensure the normal operation of the project company and the development and construction of the project, ensure that the project can be delivered and certified on time, safeguard the legitimate rights and interests of property buyers, solve the problem of subsequent development funds of the project, promote the resumption of work and production of existing projects, and ensure the cooperation of creditors and property buyers Legal rights and interests. “
Wukuang trust, one of the protagonists involved in the debt, also responded to the media.
Minmetals Trust said that in the face of some project risks in cooperation with Evergrande group, Minmetals trust took safeguarding the interests of investors as the primary goal and sought solutions. After repeated argumentation, Minmetals trust believes that promoting the normal operation of the project by obtaining all the equity and management rights of the project company is the best solution to the problem of Evergrande project at present. Following the principles of marketization, legality and compliance, Minmetals trust has actively promoted the equity transfer of the project and made substantial progress. At present, Minmetals trust has obtained all the equity of some project companies. For these real estate projects, Minmetals trust will take positive, positive and pragmatic measures to ensure the normal and stable operation of the project.
It is worth noting that Minmetals trust is a trust institution under China Minmetals Group, which happens to have a real estate development sector – Minmetals real estate. According to public information, Minmetals trust has provided financing for Evergrande real estate, Sichuan Languang Development Co.Ltd(600466) , Tahoe Group Co.Ltd(000732) , huaxiangnian, Aoyuan and other real estate enterprises. At present, these cooperative enterprises have fallen into the dilemma of tight capital chain to varying degrees.
In the view of insiders, in the current situation that the real estate company of the financier cannot develop with its own financial strength, the trust company can only complete the remaining projects by itself to ensure the delivery of the house. Only when the house is delivered, the trust company can get the money in the pre-sale fund supervision account and ensure the payment of principal and interest of investors.
It is reported that Evergrande, Everbright trust and Minmetals trust are still negotiating on similar cooperation in multiple projects.
