Evergrande Offers Angry Retail Investors Repayment Plan

(Bloomberg) -- China Evergrande Group offered a plan to appease investors concerned about overdue payments for its high-yield wealth management products, according to people familiar with the matter. 

The company proposed three options for buyers on Monday, said two clients who were informed by their product managers and asked not to be identified. They included repayment through cash installments, properties or investors’ payables on residential units they have already purchased, the people said. Caixin reported the revision earlier. 

Under the new plan, retail investors can choose to be repaid 10% of their principal and interest every quarter, starting the final working day of the month due, according to an internal memo on Monday seen by Bloomberg.

Evergrande didn’t immediately respond to inquiries on the new plan and the Caixin report. 

Such wealth products are offered by Evergrande Wealth Management Co., the group’s internet-finance affiliate. Evergrande expanded heavily in the financial sector from 2015 to 2017, before being named a de facto financial holding company in 2018 by the central bank. Many of the product’s buyers are Evergrande’s own employees. 

Regulators have been moving to curb issuance of such shadow finance products as the underlying assets are often off-balance sheet. Evergrande’s 6.27% yuan bond due 2023 plunged 31% as of 4:52 p.m. Monday, catching up with last week’s big declines in some of the developer’s other local notes maturing in two years.  

Evergrande’s repayment plan Monday treat all investors equally, standing in contrast to an interim plan released late last week that prioritized smaller investors, according to people familiar with the matter. 

When Evergrande stopped repaying some investors last Thursday, those holding less than 100,000 yuan ($15,500) were to be paid in full and those with exactly 100,000 yuan were to get half back, according to two investors briefed earlier. Those holding more than 100,000 yuan of the products were to see payments extended by two to four years and amortized, according to the company’s earlier plan. 

Apart from the cash option, the new plan also allows investors to purchase Evergrande’s residential units, offices, stores and parking units at deeper discounts to offset wealth products due, according to the memo. 

If investors have bought Evergrande’s residential units by Sept. 12, they can also request to use the money they’re owed to offset payments. Details are still pending for the second and third option. 

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With assistance from Bloomberg