Overview

• Evergrande, the beleaguered Chinese property developer, has proposed a new debt restructuring plan, offering its offshore bondholders a 30% equity stake in its two Hong Kong-listed subsidiaries.
• These offshore bondholders, who hold around $19 billion in debt, could face significant losses under the new terms as the property developer's dollar bonds last traded at about 2.25 cents on the dollar.
• While this restructuring plan might result in a higher recovery rate for creditors than a potential liquidation scenario, some key bondholders remain opposed, fearing major losses.
• The new plan, overseen by a work committee under the southern Guangdong provincial government, comes after Evergrande's initial debt restructuring strategy was disrupted by an investigation into its billionaire founder, Hui Ka Yan, and a ban on issuing new dollar bonds.
• In order for the proposal to proceed, it will need to gain approval from Chinese regulators and overcome opposition from Class C creditors, which include private lenders, some Chinese banks, and pre-IPO investors.