UPDATE 1: 8:46 a.m. ET 10/8/2021: Kirkland & Ellis and Moelis & Co., advisors to an ad hoc group of Evergrande’s offshore bondholders, said on a call today, Oct. 8, with the investors that they have not had any meaningful dialogue with Evergrande and its advisors. The advisors said they are concerned about the lack of transparency around the company’s next steps and potential value leakage resulting from the
sale of its shares in Shengjing Bank and the rumoured
transaction involving its listed property management services company.
Kirkland & Ellis is working with offshore law firm Harneys to formulate a contingency plan to prevent further dissipation of assets, saying that it is prepared to protect bondholders’ interest if Evergrande takes any actions that are not consistent with their rights.
Inclusive of parties who have indicated an intention to join, the ad hoc group holds $5 billion of offshore bonds issued by China Evergrande and its subsidiary Scenery Journey, with the core committee consisting of six members that include large international funds, real money and distressed credit investors and in aggregate hold $2.5 billion of the bonds.
Bert Grisel, a managing director of Moelis, said the advisors reached out to Evergrande and its advisors about a month ago with the intention to engage in a dialogue and conduct due diligence, but there has been no meaningful dialogue or provision of any information, especially with regard to their concerns about the company’s announced sale of a 19.9% stake in Shengjing Bank, the reported plan to sell a controlling interest in Hong Kong-listed subsidiary Evergrande Property Services as well as possible
discussions with holders of the Jumbo Fortune Enterprises bonds.
Representing Kirkland on the call, Partner Neil McDonald said the firm has written to Evergrande’s directors reminding them of their fiduciary duties when a company is in financial difficulties as well as their needs to protect creditors’ interest by preserving assets including cash and treat creditors equally.
In addition to transparency of information, the ad hoc group has requested Evergrande to facilitate a transparent restructuring process and work with the bondholders through a safe harbour arrangement.
McDonald added that the advisors are prepared to sign a nondisclosure agreement with the company to facilitate discussions, but there has not been any request for any formal or informal standstill.
The call today did not have a Q&A session.
Original Story 12:10 a.m. UTC on Oct. 7, 2021
Evergrande’s Ad Hoc Group Advisors Will Host Bondholders Call Tomorrow, Oct. 8 at 6:30pm HKT
Kirkland & Ellis and Moelis & Company, advisors to the
ad hoc group of Evergrande’s offshore bondholders, is hosting a bondholders’ call on Friday, Oct. 8 at 6:30pm Hong Kong time / 11:30am London Time / 6:30am Eastern Time to provide an update on the current status of the matter. Bondholders are encouraged to participate and disclose their bond holdings by registering here:
https://moelis.zoom.us/webinar/register/WN_gVYpL4JgQyyjz8g9DtvQ3w
Enquiries can be directed to:
Kirkland & Ellis
Email: Evergrande@kirkland.com
Moelis & Company
Email: Project_Evergrande_Ext@moelis.com