China Evergrande Group (恆大集團) sold a luxury superyacht for about US$32 million earlier this year, said two sources, further shrinking the developer’s offshore assets as its cash crunch worsened and it scrambled to pull together a debt revamp plan.
Evergrande’s offshore bondholders are expected to sharpen their focus on offshore assets as the developer’s debt restructuring plan struggles with the founder now being investigated over suspected “illegal crimes.”
The debt restructuring process was further complicated this week after Evergrande said it was unable to issue new debt due to an investigation into its main China unit. Analysts have said delays to the debt restructuring raise the risk of the company being liquidated.
Photo: Reuters
Evergrande sold the 60m superyacht Event for US$32 million as part of a process to sell down non-core assets, said two sources with knowledge of the matter, declining to be named as the information is not yet public.
A third source with knowledge of the matter confirmed the sale of the yacht.
With Evergrande founder and chairman Hui Ka Yan (許家印) under investigation, analysts and investors are questioning who will run the company’s operations and what will happen to the offshore debt restructuring plan.
Evergrande is the world’s most indebted property developer with more than US$300 billion in total liabilities. Its financial woes, which first became public in 2021, has weighed on the Chinese economy as well as global markets.
After defaulting on its US dollar bonds in late 2021, Evergrande has been in the process of seeking creditors’ approval for its proposals to restructure offshore debt worth US$31.7 billion, which includes bonds, collateral and repurchase obligations.
Compared with its US$31.7 billion in total offshore liabilities, Evergrande has far fewer assets outside China. The sale of the Event means that the company’s foreign creditors will have fewer options in any potential liquidation process.
The Event was delivered in 2013 and was given the World Superyacht Award the following year, according to its Dutch manufacturer Amels’ Web site. It was estimated to be worth US$60 million in some Chinese media reports over the past two years.
Event was registered in Evergrande’s name, the sources said, which meant the proceeds would be returned to the developer, which has seen some of its own and the founder’s offshore assets divested or seized by lenders for loan defaults.
A Boeing private jet belonging to Evergrande was sold in July last year for US$100 million, the sources said.
Evergrande did not respond to a request for comment on the jet sale.
Lenders to Evergrande’s Hong Kong headquarters appointed a receiver in September last year to seize the building and tender it for sale. The property was valued from HK$8 billion to HK$9 billion (US$1 billion to US$1.15 billion) at the time.
Regarding the company’s remaining offshore assets and those of its founder, creditors would need to establish whether they have already been used as collateral to raise funds.
Foreign bondholders’ “ability to get to these [offshore] assets is a function of the legal claim — has he [Hui] pledged it?” One source involved in the Evergrande legal process said.
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