HONG KONG: China Evergrande has been accused of conducting a “fake” conference call with creditors while it works on a restructuring proposal that could see the property giant dismantled.
Some bondholders were disappointed by the 25-minute call, which they say included prepared answers to questions and lacked insights on Evergrande’s plans.
“(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,” one offshore Evergrande bondholder told Reuters.
Bondholders miss invite
One bondholder, German credit analyst Dr Marco Metzler, said he didn’t even receive an invitation to the call and described the meeting as “fake”.
“Me and my team … are holders of a bond with a face value of $200,000, yet we have not received an invitation to the purported call, nor a response to a request for the ability to dial in,” Dr Metzler said.
“There is also nothing on Evergrande’s official investor relations page regarding the call.”
Deepening crisis
Evergrande has now accumulated debts of more than $300 billion and is struggling to repay creditors, suppliers and investors in wealth management products.
According to Reuters, it missed some dollar bond payments last month, sparking calls for talks, and nearly $20 billion of its international bonds are now deemed to be in default.
Evergrande’s newly-appointed executive director Siu Shawn said on the call with creditors that the group was working on a comprehensive restructuring plan, which he hopes to propose within six months.
Shawns comments, however, appear to have given little comfort to some bondholders, including Dr Metzler, who has been highly critical of Evergrande in the past.
“Even with a newly appointed executive director Siu Shawn, it seems the old brash nature of the company remains,” Dr Metzler said.
“Ratings agency Moody’s noted in a report today that covenant packages in Evergrande’s offshore issues have become increasingly lax, loosening or even eliminating extremely important protections and jeopardizing the prospects for offshore bondholder recovery.
“We offshore bondholders stand behind the creditors of Evergrande’s more than 1,950 onshore subsidiaries, none of which guarantee the offshore bonds.
“Regardless of this, we offshore creditors will put Evergrande into the well deserved ‘D’ status.”