HONG KONG • Evergrande Group's chief executive is holding talks in Hong Kong with investment banks and creditors over a possible restructuring and asset sales, two people said, as the Chinese developer battles against default on more than US$300 billion (S$404 billion) in debts.
CEO Xia Haijun, a confidant of chairman Hui Ka Yan and who runs Evergrande's day-to-day operations including financing, has been in Hong Kong, where the property firm has a major presence, for more than two months, the two sources told Reuters.
Evergrande, which is reeling under more than US$300 billion in liabilities, has left its offshore investors in the dark about repayment plans after already missing three rounds of interest payments on its dollar bonds.
One of the sources said Mr Xia needed to communicate with foreign banks on loan extensions and repayments. The source declined to disclose the identity of the creditors that Mr Xia had spoken to in recent days.
"Xia also needs to sort out how many off-balance sheet debts the group has offshore, because many were underwritten at subsidiary levels and he himself may not be even aware of (that)," he said. "Before that, they cannot work on restructuring and talk to bondholders."
Evergrande has been scrambling to divest some of its assets to raise cash as concerns have grown in recent weeks about a possible collapse and the impact on global markets and China's economy.
Chinese state-owned Yuexiu Property has pulled out of a proposed US$1.7 billion deal to buy Evergrande's Hong Kong headquarters building over worries about the developer's dire financial situation, Reuters reported on Friday.
Meanwhile, Hong Kong's audit regulator said on Friday it was investigating Evergrande's 2020 accounts and their audit by PwC because it had concerns about the adequacy of reporting on whether it could continue operating as a going concern.
The Financial Reporting Council (FRC) said Evergrande as at the end of last year reported cash and cash equivalents of 159 billion yuan (S$33.3 billion), which did not cover its current liabilities of 1.5 trillion yuan, and had further borrowings of 167 billion yuan maturing next year.
However, the accounts made no explicit statement about whether material going-concern uncertainties existed before or after the effects of implementing plans that Evergrande said it had to mitigate potential impacts on cash flow, it said.
PwC expressed an unmodified audit opinion in its auditor's report on the 2020 annual accounts, but made no reference to material uncertainties regarding whether Evergrande was a going concern, the FRC said.
REUTERS, BLOOMBERG
