China Evergrande’s widely anticipated liquidation at the Hong Kong High Court this past Monday drew such a crowd that screens to live-stream the proceedings were set up in the hallways outside the court.
Don’t judge, okay?
It may be hard for readers outside Hong Kong to imagine people jostling for seats at a winding-up hearing, but things have been a bit dull around here - even after our three-year Covid lock-in ended - and the liquidation of a heavily indebted Chinese real estate developer is quite the social event.
A historic moment.
The nervous excitement was described by some who attended as what you might expect for a public execution.
It was a season-ender, a finale, if you will. A moment made for popcorn.
The villain - China Evergrande - had run rampant through the capital markets like some sort of never-finished Death Star project, fueled with off-balance-sheet debt and keepwell deeds, trampling across the sacred Three Red Lines and destroying the China high-yield bond market in the process.
But on Monday, its leadership (the bad guys) were finally going to be brought to book and slung out of their ever-unfinished project, to be replaced with an incoming receiver.
The hero - presiding Judge Linda Chan - had previously granted what she said (at the time) was a “final” adjournment to the winding-up petition, fueling the widespread expectation that Evergrande would at last get tipped into liquidation.
(As with all good dramas, Judge Chan had also been built up ahead of the hearing as a modern-day slayer of dodgy-debt-fueled Chinese real estate developers, the judge who tipped Jiayuan International into liquidation, a woman for whom the word final means just that: Final.)
The scene was set. The crowd awaited the execution with bated breath.
But (as with all good dramas) proceedings did not follow the expected script.
Plot Twist #1: The petitioner, the oddly named Top Shine Global Ltd. of Intershore Consult (Samoa) Ltd. , was present at the court but did not ask for a winding up order, as it had previously, and did not argue against Evergrande’s application for an adjournment.
This led to obvious questions of why Top Shine was silent, and who will step into the breach if Top Shine does not seek a winding-up order?
Plot Twist #2: Counsel for an ad hoc group holding $5 billion of the company’s USD notes pointed out that the company’s proposed scheme had already been rejected by the AHG, as the recovery rate was worse than in a liquidation. That begs the question of whether the proposal is realistic and a restructuring agreement can be agreed.
Ultimately, Judge Chan granted Evergrande’s request for an adjournment, a lengthy one too, from Dec. 4 to Jan. 29, enough time to allow the Death Star to negotiate a restructuring proposal with its offshore creditors and obtain majority support.
Not surprisingly, the crowd groaned audibly when it became clear that there was to be no liquidation order, and the case was adjourned.
Still, we may return on January 29.
Particularly if the AHG steps out of the shadows as a surprise petitioner to liquidate the Death Star, and the court offers free popcorn.
Of course, there are many who say that Monday’s adjournment
was the historic moment, and we have misread it.
They say we just haven’t accepted the show is over yet, and we should get over it.
Don’t judge.
Coverage of China Evergrande is HERE. Coverage of China Real Estate is HERE.
OTHER TOP STORIES:
Indonesia flag carrier
PT Garuda Indonesia Tbk, announced a tender offer to purchase up to $50 million of the outstanding $536.5 million 6.5% senior unsecured notes due 2031 issued by the company and the $78 million sukuk certificates due 2031, by tapping into the sinking fund which was established as part of the restructuring agreement.
Coverage of Garuda Indonesia is HERE.
Indonesia garment maker
PT Pan Brothers Tbk.’s Vice President Director Anne Patricia Sutanto said lenders of the outstanding $128.3 million amended and restated syndicated facility due Dec. 31 agreed to a five-year extension, with the credit agreement expected to be signed by late January. Consequently, the company made the overdue $5 million amortization payment of the syndicated facility.
Coverage of Pan Brothers is HERE.
IIFL Finance Ltd., IIFL Group’s non-banking finance arm, raised a Japanese yen-denominated three-year external commercial borrowing loan equivalent to about $50 million from Mizuho Bank.
The three-year bullet loan has been priced at TONAR +120 bps and an all-in of 8.6% to 8.8% in INR terms. IIFL Finance will use the funds for onward lending. The company is likely to raise another $50 million-equivalent in JPY.
Coverage of IIFL is HERE.
Bharti Telecom Ltd. tapped India’s domestic bond market to raise INR 80 billion ($960.07 million) from through a privately placed issue of unsecured, rated, listed, redeemable, non-convertible debentures, or NCDs. About INR 24 billion of the NCD issue was to be anchored by multiple domestic mutual funds and insurance companies and INR 56 billion of the issue size was available for non-anchor investors to bid on the electronic bidding platform.
Coverage of Bharti Airtel is HERE.
Adani Electricity Mumbai Ltd. accepted to purchase $119.99 million in aggregate principal amount of the notes that were validly tendered as of the early tender deadline of Nov. 28, in line with its proposed tender offer terms announced on Nov. 13 to buy back up to $120 million of the outstanding notes. Noteholders validly tendered an aggregate principal amount of $762.49 million of the company’s outstanding $1 billion 3.949% senior secured notes till the early tender deadline of Nov. 28. The company will pay an early tender consideration of $850 per $1,000 principal amount for such notes which have been tendered.
Coverage of Adani Group is HERE.