At 9 p.m. on March 22, Evergrande group held its second investor meeting this year. At the meeting, executive director Sean of Evergrande, non-executive director Liang Linlin, member of risk management committee Chen Yong and Hong Kong General Manager Huang Xiangui communicated with investors on issues of concern.
At the meeting, the above-mentioned executives of Evergrande introduced the current operation of Evergrande group, the progress of debt restructuring and the work of leading the war between property and automobile respectively, but most of them had disclosed information, especially there was no further substantive progress in debt restructuring.
Chen Yong, member of China Evergrande risk resolution Committee, reiterated at the meeting that Evergrande would put forward a restructuring plan by the end of July this year. At the first investor meeting on January 26 this year, Sean, executive director of Evergrande, said that he planned to launch a non restructuring plan within six months.
In terms of overseas debt, Sean said that as of March 22, Evergrande and the intermediary team had contacted 89 overseas institutional creditors or their appointed intermediaries and some individual investors through teleconference, e-mail and Bloomberg terminals.
"According to the preliminary sorting, the company's overseas direct debt is equivalent to about US $22.7 billion, including US $14.2 billion of overseas bonds issued by China Evergrande, US $5.2 billion of overseas bonds issued by Jingcheng company, a subsidiary of space-based holdings, and US $3.3 billion of other overseas debts such as project financing and private placement financing." Sean said.
On the domestic side, Sean also said that through active and effective communication, the domestic debt remained stable on the whole, and the extension of open market bonds was promoted in an orderly manner.
It is reported that in the formulation of the restructuring plan, Evergrande is also working with the intermediary team to comprehensively evaluate the financial situation and explore various potential plans.
At the meeting, Liang Senlin, a non-executive director of Evergrande, also said that Evergrande was promoting the introduction of strategic investors of Evergrande property and Evergrande automobile, striving to restore the value of the two listed companies and provide support for overseas debt restructuring.
The following is the minutes of the meeting:
Sean: Dear creditors, I'm Sean. Now I'm the executive director and CEO of China Evergrande group. On behalf of the group, I would like to communicate with global creditors and report on the debt risk resolution of the group. First, recent work progress.
Since the first creditors' teleconference was held on January 26, the company has spared no effort to stabilize production and operation, actively and continuously communicated with creditors, gathered all forces to study the restructuring plan, and focused on the following aspects:
In terms of stable operation, the company overcame the adverse factors such as overdue debts and lack of liquidity, made every effort to promote the resumption of work, production and guaranteed delivery of buildings, and earnestly safeguarded the legitimate rights and interests of buyers and creditors. In December last year, the company completed the delivery of 37899 houses in a single month. By the end of February, the resumption rate of non Winter Rest projects of the company had reached more than 80%, and more than 1700 construction units were confirmed to continue to cooperate, accounting for more than 70% of all cooperation units. Since this year, with the efforts of all parties, the bottom of the company's operation has gradually stabilized. The company will continue to do everything possible to maintain orderly operation and spare no effort to ensure the delivery of buildings. Hengchi 5 Automobile officially went offline at the beginning of this year, and recently passed the publicity of the 353rd batch of new products by the Ministry of industry and information technology, which has met the sales qualification. At present, Hengda automobile is promoting the mass production and marketing preparation of hengchi 5 automobile as planned, and it is expected to go offline in mass production around the end of June this year.
In terms of communication with creditors, in order to strengthen communication with creditors, since January 21, the company has added China International Capital Corporation Limited(601995) , BOC International, Zhonglun law firm and Kindu law firm as restructuring consultants to cooperate with the original team. The company actively contacted creditors and listened to creditors' opinions and suggestions. As of March 22, the company and the intermediary team have contacted 89 overseas institutional creditors or their appointed intermediaries and some individual investors through teleconference, e-mail and Bloomberg terminals. After the assets of the Hong Kong heshengwei project were taken over, the company actively cooperated with the relevant takeover work, actively recommended intended investors, and planned to release the asset value to the greatest extent through an open and fair treatment, so as to strive for the return of as much residual value to the company as possible and protect the legitimate rights and interests of other creditors.
On the domestic side, through active and effective communication, the domestic debt remained stable on the whole, and the extension of open market bonds was promoted in an orderly manner.
In terms of formulating the restructuring plan, the company is working with the intermediary team to comprehensively evaluate the financial situation and explore various potential plans. According to the preliminary sorting, the company's overseas direct debt is equivalent to about US $22.7 billion, including US $14.2 billion of overseas bonds issued by China Evergrande, US $5.2 billion of overseas bonds issued by Jingcheng company, a subsidiary of space-based holdings, and US $3.3 billion of other overseas debts such as project financing and private placement financing. In addition, there are also cases where overseas entities of China Evergrande have provided guarantees for some domestic financing and provided repurchase commitments and other contingent debts for some overseas equity financing. For this, the company is organizing an intermediary team to further sort out and summarize relevant specific information.
In the last teleconference, I made it clear on behalf of the company that we would put forward a debt restructuring plan before the end of July this year. In order to achieve this goal, the company will continue to do the following work with the intermediary team:
First, further strengthen communication with creditors. The company will continue to maintain communication with creditors with the support and cooperation of the intermediary team. When conditions are ripe, the company will provide appropriate information and materials to overseas creditors and their consultants who have signed confidentiality agreements according to the progress of relevant work, and carry out substantive communication and exchange on the ideas of the reorganization plan.
Second, actively promote the resumption of trading. Due to the significant changes in the operation of the real estate business, the auditors have added a large number of additional audit procedures this year, coupled with the impact of covid-19 epidemic, the auditors need more time to confirm the company's financial situation. China Evergrande, Evergrande property and Evergrande automobile will postpone the publication of the audited annual results, and have applied for suspension of trading on the Hong Kong stock exchange, In this regard, the company will implement relevant work in accordance with the relevant guidelines and requirements of the Hong Kong stock exchange, complete the disclosure of the annual report as soon as possible, and apply for resumption of trading.
Third, independently investigate deposit deduction according to law. During the review of the 2021 financial report, the company found that the pledge deposit of about 13.4 billion yuan of Evergrande property that was not provided to the third party had been enforced by the relevant banks. In order to protect the right to know and supervision of minority shareholders and creditors, Evergrande property will establish an independent investigation committee and appoint experts to investigate the pledge guarantee, and China Evergrande will also establish an independent investigation committee to conduct relevant investigation, The progress and results of the investigation will be announced in time. Meanwhile, under the supervision of China Evergrande group risk resolution Committee, the company's legal adviser and compliance adviser, the company will further improve and strengthen the internal control mechanism and protect the legitimate rights and interests of investors.
Fourth, strive to restore the value of listed companies. Evergrande property and Evergrande automobile are important overseas listing platforms of the company. The company fully understands the concerns of creditors. In order to restore the value of listed companies, the company is trying to contact third-party investors and promote the introduction of strategic investors of Evergrande property and Evergrande automobile, so as to maximize the interests of all parties.
Subsequently, the company will disclose major progress in a timely manner according to the work and the requirements of the Hong Kong stock exchange.
Finally, we once again urge the creditors to continue to support the company, do not take radical actions, provide the necessary time and space for the company to promote debt restructuring, and jointly maintain the current hard won stable situation, as the basic guarantee for the formulation and successful implementation of the restructuring plan, so as to ensure that the rights and interests of all stakeholders are not damaged.
Next, let's invite Mr. Liang Senlin to answer relevant questions to you.
Liang Linlin: Dear creditors, Hello, I'm Liang Linlin. I'm a non-executive director of China Evergrande. Since the debt risk of Evergrande group broke out, all creditors have expressed high concern about risk resolution and subsequent debt arrangements. At the same time, they also gave the company full understanding that it takes time to resolve the risk. The company expresses its great thanks.
Let me give a unified answer to the problems concerned by creditors and the problems raised in the last teleconference.
1. Question: I see some media reports that oak capital has taken over the real estate development project in Yuen Long, Hong Kong. Can you introduce the latest progress after taking over.
Answer: on January 30, 2022, the company issued an announcement to explain the heshengwei project in Yuen Long, Hong Kong. Heshengwei project is a real estate development project in Yuen Long, Hong Kong. As a mortgage asset, it has obtained US $520 million financing from the creditor. Because the company failed to pay its due debts, the creditor took over the project in accordance with the contract. At present, the company is negotiating with the receiver, It is planned to sell the project at a reasonable market price in an open and fair manner to maximize the protection of the rights and interests of all parties. The residual value of assets after sale will be preferentially used for overseas operations.
2. Question: it is said that Hong Kong Evergrande center has been used to guarantee the syndicated loan. Can you introduce the specific situation of the loan and the company's follow-up plan for Hong Kong Evergrande center?
Answer: with regard to this question, the company has used Hong Kong Evergrande center to guarantee the syndicated loan in the early stage. In order to properly deal with the repayment pressure of the syndicated loan and reduce the interest cost of the loan, the company is contacting and negotiating with potential powerful buyers to repay the syndicated loan through asset sale. The balance of the returned funds will be used to alleviate the problem of the company's overseas liquidity.
3. Question: according to media reports, the company has carried out a new cooperation mode of equity transfer + custody operation with Minmetals trust, Everbright trust and other institutions this year. Will the company continue to use a similar mode to revitalize domestic real estate projects in the future?
Answer: with regard to this question, in order to maintain the normal operation of the company, promote the resumption of existing projects, and protect the legitimate rights and interests of creditors and buyers, the company has cooperated with some trust companies through equity transfer + custody operation mode. For specific information in this regard, please refer to the announcement issued by the company on February 25 this year. I would like to add that under the current situation of tight liquidity of the company, The above mode is a realistic choice to maintain the orderly operation of the company and protect the legitimate rights and interests of all parties. The recovered funds will be used to ensure the construction and delivery of other domestic projects of the company. The subsequent company will make its best efforts to continuously promote the resumption of work and production.
4. Question: what is the reason why China Evergrande, Evergrande property and Evergrande automobile delayed publishing their annual performance? When is the 2021 annual report expected to be issued?
Answer: as stated in the announcement, due to the significant changes in the operation of the real estate business, the auditors have added a large number of additional audit procedures, coupled with the impact of covid-19 epidemic, the auditors need more time to confirm the company's financial situation. China Evergrande, Evergrande property and Evergrande automobile will postpone the publication of the audited annual results and have applied for suspension of trading on the Hong Kong stock exchange, The auditors will actively promote the release of the company's annual performance under the supervision and coordination of the board of directors.
5. Question: hengchi 5 model has completed the pilot test of new products. How is the mass production progress of Hengda? Are there any restructuring plans or similar arrangements?
Answer: in terms of Evergrande automobile, hengchi 5 Automobile went offline for the first time at the beginning of this year. On February 11, it entered the publicity list of the 353rd batch of new products of the Ministry of industry and information technology. It has recently passed the publicity period and is qualified for sales. It is planned to go offline in mass production around the end of June this year. At present, Evergrande automobile is mobilizing all resources to fully ensure the mass production of hengchi 5 models and make preparations for subsequent marketing. At the same time, the company actively promotes the introduction of strategic investors of Evergrande automobile, and is widely contacting potential investors to strive to realize the value restoration of Evergrande automobile. The company will disclose the progress of introducing investors and relevant information in accordance with the Listing Rules of the Hong Kong stock exchange.
6. Question: what is the specific situation of Evergrande property deposit deduction, the current business situation and the next work plan?
Answer: regarding this question, China Evergrande and Evergrande property have made information disclosure. The company attaches great importance to the relevant situation. Evergrande property will set up an independent investigation committee and appoint experts to investigate the pledge guarantee. China Evergrande will also set up an independent investigation committee to conduct relevant investigation, and will announce the progress and results of the investigation in a timely manner. At the same time, the company's risk resolution committee will also assist China Evergrande, Evergrande property and Evergrande automobile to carry out comprehensive self inspection and rectification, further improve and strengthen the internal control mechanism, and effectively protect the legitimate rights and interests of small and medium-sized investors and creditors. At present, the daily operation of Evergrande property is generally stable, with a management area of 473 million square meters and a total of more than 3000 contract projects. It is one of the largest property management service enterprises in China and ranks second among the listed property management companies in Hong Kong. It will continue to undertake the property management services after the completion of the guaranteed building project in the future. With the orderly progress of the guaranteed delivery building, it is expected to drive the further growth of the area under management. At present, the company is also in extensive contact with potential investors, actively promoting the introduction of war investment of Evergrande property, striving to restore the value of Evergrande property and maximize the interests of all parties. The follow-up company will disclose the progress of independent investigation on deposit deduction and information on the progress of the war in accordance with the rules of the Hong Kong stock exchange.
7. Question: in addition to overseas US dollar bonds, what other overseas debts does the company have?
Answer: in addition to the US $14.2 billion overseas bonds issued by China Evergrande and the US $5.2 billion overseas bonds of Jingcheng company, a subsidiary of space-based holdings, the company also has US $3.3 billion in project financing and private financing. The corresponding creditors include private bond investors such as commercial banks, asset management companies and private equity funds. In addition, the company also provides guarantee for some domestic financing, And overseas contingent debts such as repurchase commitments for some overseas equity financing. At present, the company is sorting out other contingent debts related to the company and will maintain continuous communication with investors in the future.
8. Question: can you introduce the progress of the company's current negotiation with overseas creditors?
Answer: since the first teleconference, the company and the financial advisory team have actively maintained communication with creditors and listened carefully to their opinions and suggestions. Most creditors agree that promoting the reorganization is in the interests of all parties. In the next step, the company will continue to maintain a normalized communication mechanism with creditors and provide information and materials to overseas creditors and their advisers who have signed confidentiality agreements according to the progress, Carry out substantive communication and exchange on the ideas of the restructuring plan. All bondholders are welcome to take the initiative to contact us and the financial advisory team.
9. Question: what is the next step in the framework of the company's overseas debt restructuring plan?
Answer: at present, the company is working with the intermediary team to comprehensively evaluate the financial situation. At the same time, the company is also discussing the framework of the restructuring plan with the financial consultant, and will continue to communicate with all kinds of creditors, listen to opinions and absorb suggestions. Meanwhile, as mentioned earlier, the company is promoting the introduction of strategic investors of Evergrande property and Evergrande automobile, striving to restore the value of the two listed companies and provide support for overseas debt restructuring.
