Evergrande pushes ahead to sell land despite creditor wrangle

Hong Kong — China Evergrande Group will continue with efforts to sell a plot of undeveloped land in Hong Kong even after the appointment of a receiver by a creditor, a person with direct knowledge of the matter said.

The appointment of a receiver will also not have any bearing on the group’s restructuring process, said the person.

US asset manager Oaktree Capital Management, a lender to Evergrande to develop a vast land plot in the rural Yuen Long district, has sought to seize control of the asset by appointing a receiver, a separate person said in January.

Oaktree’s move came after Evergrande, the world’s most indebted property developer with more than $300bn in debt, defaulted on a secured loan, said the first person, declining to be identified as he was not authorised to speak to the media.

The person said the asset was likely to be sold in the “relative near term”, and that Oaktree would be repaid after the sale was completed, and any residual proceeds would be recovered by Evergrande.

The Financial Times reported on January 28 that Oaktree also took control of a residential development project of Evergrande in Shanghai after the developer defaulted on a secured loan provided by the asset manager late in 2021.

The person said no other international creditor of Evergrande had taken similar actions.

Evergrande said in an exchange filing on January 30 that it was seeking legal advice on the appointment of a receiver for the Yuen Long plot and that the company was in discussions with the lender.

The developer said the land in Yuen Long is charged as security for $520m advanced to the group in January 2021. Evergrande's filing, however, did not mention the name of the creditor.

Evergrande did not immediately respond to a Reuters request for comment. Oaktree declined to comment.

Once China’s top-selling developer, Evergrande said in January it aimed to have a preliminary restructuring proposal in place within six months as it scrambled to reassure creditors hit by defaults since its finances began to unravel in 2021.

The developer has been struggling to repay creditors, suppliers and investors in wealth management products. Nearly $20bn of its international bonds are now deemed to be in default.

“It’s a very complex situation so the company needs time to evaluate alternatives and formulate a restructuring plan; it has set a six-month deadline within which [it needs] to achieve these objectives,” said the person.

Reuters