HONG KONG (Reuters) – China’s most indebted property developer Evergrande Group is struggling to solve its debt crisis, while there are increasing signs that policymakers are stepping in to avoid a hard landing for a company deemed too big to fail.
Here is a timeline of events leading to its debt problems and what the firm has done to raise funds so far:
Aug 2017
Evergrande vows to cut its debt for the first time, aiming to slash net gearing ratio to 70% by June 2020 from 240% in June 2017.
Nov 2018
The central bank names Evergrande in a report as one of the few financial holding conglomerates on its watch that it says could cause systemic risk.
March 2020
Evergrande targets cutting its debt by 150 billion yuan ($23.3 billion) annually for three years.
Aug 2020
Regulators meet with 12 major property developers, including Evergrande, in Beijing to introduce caps for three different debt ratios in a pilot scheme, dubbed “the three red lines”.
Evergrande sells 28% of its property management unit for $3 billion in a pre-IPO deal.
It pledges in a letter to the Guangdong provincial government to approve a Shenzhen backdoor listing plan that has languished for four years, warning it would face a cash crunch that could lead to systemic risks.
Sept 2020
Company offers 30% discount on properties for a month to push sales.
Oct 2020
It raises $555 million in a slimmed-down secondary share sale in Hong Kong.
Nov 2020
It terminates the Shenzhen backdoor listing plan and strikes an agreement with some strategic investors not to demand repayment.
Evergrande Property Services Group’s Hong Kong IPO raises $1.8 billion.
Jan 2021
Electric vehicle unit China Evergrande New Energy Vehicle raises $3.4 billion by bringing in six new investors.
March 2021
Evergrande sells 10% of its online real estate and automobile marketplace Fangchebao to 17 investors for $2.10 billion in a pre-IPO deal.
It targets to meet all three caps on debt ratios by the end of 2022, and lays out plan to list Fangchebao by early next year, and spin off other units including spring water and tourism.
June 2021
Evergrande says it will sell more than half of its 58% stake in smaller peer Calxon, worth $386 million.
Fitch downgrades Evergrande to ‘B’ from ‘B+’ with a negative outlook.
The developer arranges HK$13.6 billion ($1.75 billion) to repay a maturing bond and interest on all other dollar bonds, and it says it will have no further bonds due before next March.
Evergrande achieves one of the debt ratio caps set by regulators, by cutting its interest-bearing indebtedness to around 570 billion yuan, from 716.5 billion yuan six months ago.
July 2021
A court orders a freeze on a 132 million yuan bank deposit held by Evergrande at the request of China Guangfa Bank Co. Evergrande says the loan is not due until next March and it plans to take legal action.
Some banks in Hong Kong decline to extend new loans to buyers of two of Evergrande’s uncompleted residential projects.
Evergrande scraps a special dividend proposal. S&P cuts its ratings on the company by two notches to B- from B+ with a negative outlook.
Fitch downgrades Evergrande to “CCC+” from “B”.
Aug 2021
Evergrande agrees to sell stakes in its internet unit HengTen Networks Group Ltd worth a total of HK$3.25 billion.
Moody’s downgrades Evergrande’s corporate family rating (CFR) by two notches to “Caa1” from “B2”.
Legal sources say lawsuits against Evergrande across the country will be centrally handled by the Guangzhou Intermediate People’s Court.
S&P downgrades Evergrande again by two notches to “CCC” from “B-“.
The company says it is in talks to sell certain assets, included stakes in Evergrande New Energy Vehicle and Evergrande Property Services.
State media reports construction work has been halted on two Evergrande projects in Kunming, one of them for overdue payments and the other was scheduled to deliver to homebuyers in October.
Hui Ka Yan steps down as chairman of flagship unit Hengda Real Estate Group which Evergrande says is due to the termination of the backdoor listing plan.
China’s central bank and banking watchdog summon Evergrande’s senior executives and issues a rare warning that the company needs to reduce its debt risks and prioritise stability.
Evergrande pledges to do everything it can to resolve its debt issues, and it will work to maintain the stability of the real estate market.
Evergrande warns of liquidity and default risks if it fails to resume construction, dispose of more assets and renew loans, as it reports a 29% yoy decline in net profit including non-controlling interests to 10.5 billion yuan.
Sept 2021
Chairman Hui Ka Yan, along with the heads of eight task forces set up to guarantee home deliveries, lead a pledge-signing ceremony to promise buyers it will complete construction of their homes.
China Chengxin International Credit Rating Co (CCXI) downgrades Evergrande and its onshore bonds to “AA” from “AAA”, erasing the bonds’ value for use in pledged repo trading as a result.
Moody’s downgrades the corporate family rating (CFR) of China Evergrande to “Ca” from “Caa1”, with a negative outlook.
Fitch downgrades Evergrande to “CC” from “CCC+”, flagging a “probable” default.
Evergrande requests extension on trust loan interest payments to creditors including CITIC Trust.
Media report that Evergrande will suspend interest payments due on loans to two banks later in September, as well as payments to its wealth management products.
Chairman Hui vows in a forum to repay all of its matured wealth management products as soon as possible.
Angry investors crowd the lobby of Evergrande’s Shenzhen headquarters to demand repayment of loans and financial products.
Some videos circulating on Chinese social media show what are described as Evergrande-related protests elsewhere in China.
Evergrande says online speculation about its bankruptcy and restructuring was “totally untrue”, but adding it was facing “unprecedented difficulties”.
Evergrande says it has engaged financial advisers to examine its financial options and warned of cross-default risks amid plunging property sales.
($1 = 6.4451 Chinese yuan)
($1 = 7.7794 Hong Kong dollars)
(Reporting by Clare Jim; Editing by Sumeet Chatterjee and Jacqueline Wong)
