China Evergrande Group’s huge liabilities and diminishing cash disclosed in its long-overdue reports for the past two years raises questions about the viability of its restructuring plan and operations, creditors and analysts said. | Reuters
The firm announced an offshore debt restructuring plan in March, expecting it to facilitate a gradual resumption of operations and generation of cash flow. It is now gathering creditor support to complete the process.Evergrande on Monday reported a combined loss of $81 billion for 2021 and 2022. Its total liabilities amounted to 2.4 trillion yuan last year, up 23 percent from 2020.
The hearings will be held in a Hong Kong court on July 24, and a Cayman Islands court on July 25, for creditors to consider and approve the restructuring proposal. Evergrande has given creditors a basket of options to swap their debt into new bonds and equity-linked instruments backed by it and its two Hong Kong-listed companies – Evergrande Property Services Group and Evergrande New Energy Vehicle Group.
The creditor questioned whether a “disclaimer of opinion” from the auditor, Prism Hong Kong and Shanghai Limited, which also cited insufficient appropriate audit evidence was partly why the group’s shares remained suspended.
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