Evergrande’s offshore bondholders’ restructuring advisers will be hosting their first bondholder call on October 8. Advisers Moelis and law firm Kirkland & Ellis are hosting the call on behalf of an ad hoc committee with all offshore bondholders invited to join but the opinion is unclear over how these bondholders should approach potential debt negotiations. As per IFR, a several other advisers are also pushing for an offshore bondholder mandate – some say that bondholder should organize themselves to enforce Evergrande on missed coupon payments while others say that negotiating a haircut is the only option. Evergrande has about $19.2bn in offshore bonds. A Hong Kong-based fund manager said that bondholders are not in a position to dictate terms to the Evergrande. IFR references Karl Clowry a restructuring partner at law firm Addleshaw Goddard who said, “US advisory firms have traditionally taken a more restructuring led approach in these situations and negotiated/waited for a corporate tender offer, and have been less litigation focused…But if they do that and wait the (offshore) bondholders could get swept away without the opportunity to look under the hood and have a go at preserving/securing value”. Clowry advises that the bondholders should appoint a trustee, “get the 25% of bondholder support they need” and try to enforce and liquidate the offshore units. This would preserve as much value as possible. and since it could take weeks to do, the process has to be organized at the earliest.
Evergrande’s dollar bonds are trading weak with its 12% 2024s down 1 point to 20.98.