The effective nationalization of China Evergrande has begun with state-owned enterprises delivering on an edict from the Chinese Government to buy the debt-laden property developer’s assets.
This biggest deal to date involves Shenyang Shengjing Finance, who’s purchasing Evergrande’s 19.93 percent stake in the Shengjing Bank for close to $1.6 billion.
The deal, however, won’t ease the nerves of offshore bondholders.
Conditions stipulate that all proceeds be used to settle liabilities owed by Evergrande to the Shengjing Bank.
Meanwhile, a number of other state-owned enterprises have been evaluating Evergrande’s property assets.
The Guangzhou City Construction Investment Group is one of those – reportedly on the cusp of acquiring Evergrande’s massive Guangzhou FC Soccer stadium and surrounding residential projects in a deal that would net Evergrande close to $2 billion.
China Vanke, China Jinmao Holdings, and China Resources Land are among other state-backed property giants that have been earmarked by the Government to buy up more Evergrande assets.
Earlier this month, Asia Markets revealed that China would begin asking state-owned enterprises to underpin the restructuring of Evergrande.
An executive with one China-backed enterprises telling this publication the CCP is focussed on “stemming any widespread economic flow-on effects that insolvency would cause on the China economy.”
Evergrande missed a $83.5 million interest payment for a USD bond last week and today has another $47.5 million interest payment due on the EVERRE 9.5% March 2024 USD bond.
On top of this, the company has a further $180 million in bond interest deadlines throughout the next month.
Evergrande’s balance sheet at the end of the first half of 2021 showed total liabilities of over $300 billion.
Additionally, Goldman Sachs has said it believes Evergrande has potentially $156 billion in off-balance sheet debt and contingent liabilities.
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