China Evergrande Group’s overseas creditors have demanded its chairman Hui Ka Yan provide at least $2 billion in private assets as a guarantee for its imminent restructuring scheme.
Bloomberg, citing sources, reported that Evergrande is about to submit a restructuring proposal to the offshore creditors in the first week of December.
The proposal could include swapping offshore debts for shares in Evergrande’s two listed units in Hong Kong. Accordingly, Evergrande could convert its debts into equity in Evergrande Property and Evergrande Automobile.
As a condition for accepting the proposal, the group of offshore creditors asked Hui Ka Yan to infuse at least $2 billion of his personal wealth as security.
The giant debt-laden developer plans to negotiate restructuring terms in December. In addition, it is combing onshore assets to offer additional credit enhancement to bondholders.
A U.S.-based media reported that it is difficult for offshore creditors to obtain Evergrande’s assets in China under China’s current regulations to offset its debts.
Therefore, the creditors pressed the Evergrande chairman to put up his personal assets as a guarantee, which is a prerequisite for creditors to accept its debt restructuring plan.
Mired in a debt crisis, Evergrande has been struggling with more than $300 billion.
Previously, Evergrande had promised to release a preliminary restructuring plan by the end of July this year but later postponed the deadline to the end of this year.
Some domestic creditors have sold Evergrande assets they seized rather than waiting for the group’s comprehensive restructuring plan.