According to the announcement on the evening of September 28, Xu Jiayin, executive director and chairman of the board of directors of China Evergrande, has been taken compulsory measures in accordance with the law because of suspected violations and crimes. The day before, three companies in the Evergrande family briefly stopped trading. A number of industry insiders believe that as the person in charge of Evergrande, Xu Jiayin was taken compulsory measures, which will affect the progress of debt restructuring. Lawyers say this may be just the beginning, and there may be a series of big moves to follow.
After the relevant rumors about Xu Jiayin's situation came true, the market speculated that something big might happen to Evergrande. In fact, before that, Evergrande's debt restructuring has had bad news. On August 16 this year, Evergrande Real Estate issued an announcement on the Shenzhen Stock Exchange that it received the "Notice of Case Registration" issued by the China Securities Regulatory Commission, and because the company was suspected of violating laws and regulations in information disclosure, in accordance with the "Securities Law of the People's Republic of China", "Administrative Punishment Law of the People's Republic of China" and other laws and regulations, the China Securities Regulatory Commission decided to file a case against Evergrande Real Estate.
The issuance of new notes is an important part of China Evergrande's debt restructuring plan. In its debt restructuring plan in March this year, Evergrande's Option 1 stated that creditors of the agreement could receive new notes at a conversion ratio of 1:1 of the amount they could receive, with a maturity of 10-12 years and to be repaid over time. Under Option 2, the agreement arranges for creditors to elect to convert their reimbursable amount into new notes to be issued by the company with a maturity of 5-9 years.
In addition, under the Jingcheng Arrangement, creditors will receive five new notes issued by Jingcheng with maturities of 4-8 years in the aggregate principal amount of US$6.5 billion. Under the space-based agreement arrangement, creditors will receive four new notes issued by Space-based with maturities of 5-8 years in the aggregate principal amount of US$800 million.
In addition to the blockage of new note issuance, China Evergrande's overseas debt restructuring related meetings were postponed again. According to an announcement issued by China Evergrande on September 22, since March 22 this year, China Evergrande's sales have not been as expected. Based on the current situation of China Evergrande and its consultations with its advisers and creditors, China Evergrande believes that it is necessary to re-examine the terms of the proposed restructuring to match its objective circumstances and creditors' demands. As a result, the meetings on the proposed restructuring scheduled for 25 September and 26 September will not be held. And this is already the third extension.
The market is also concerned about whether Xu Jiayin's compulsory measures will affect the "guaranteed handover building"? Wang Yuchen said that Evergrande has many subsidiaries across the country, and each company is relatively independent. Therefore, for buyers who bought Evergrande's house but encountered a mess, as well as investors who invested in Evergrande, they need to pay close attention to the next direction of Evergrande, but don't worry too much. Since the state has made a move, and the "guarantee of handover building" involving so many ordinary people, there should be a corresponding solution in the end.