China’s Evergrande Group said on Sunday that it was unable to meet the requirements necessary to issue new bonds under a plan to restructure its debts due to the investigation being conducted with a real estate unit affiliated with it.
The China Securities Regulatory Commission is investigating the group’s real estate unit, Hengda Real Estate, on suspicion of violating the information disclosure policy unit.
As of the end of July, Hengda’s total debts amounted to about 277.5 billion yuan ($38 billion), and it faces 1,931 pending court cases.
“We advise holders of the company’s securities and its potential investors to exercise caution when dealing in its securities (bonds),” Evergrande Group Chairman Hui Ka Yan said in a filing to the Hong Kong Stock Exchange on Sunday.
With the total obligations owed by the group reaching more than $300 billion, some of which are external debts, Evergrande tops the list of companies suffering from a real estate debt crisis, as a result of which a number of Chinese developers defaulted during the past year, forcing many to enter into talks to restore… Debt structuring.
On March 22, the group announced plans to restructure outstanding external debts worth $22.7 billion.
The group needs the approval of more than 75% of holders of each debt class to approve the plan, which offers creditors a basket of options to exchange debt for new bonds and equity-linked instruments.