Creditors Said to Claim Evergrande on Hook for Bond Due Sunday
(Bloomberg) -- Some holders of a bond issued by a company called Jumbo Fortune Enterprises are forming a committee to press their claims in the event of a default because they maintain China Evergrande Group is a guarantor of the debt, according to people familiar with the plans.
The $260 million note from Jumbo Fortune Enterprises matures Oct. 3, according to data compiled by Bloomberg. The dollar note is guaranteed by China Evergrande Group and its unit Tianji Holding Ltd., people familiar with the matter said, asking not to be identified because the details are private.
Jumbo Fortune is a joint venture whose owners include Hengda Real Estate, Evergrande’s main onshore unit, according to a local bond prospectus published in April by Hengda. As Oct. 3 is a Sunday, the effective due date is the following day.
The deadline is perhaps Evergrande’s largest debt test since regulators recently urged the company to avoid defaulting on dollar bonds. The world’s most indebted developer and biggest issuer of junk bonds in Asia sparked fears of contagion across global financial markets in recent weeks.
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A representative from Evergrande didn’t immediately respond to a request for comment on the bond guarantee terms and repayment plan. The general line at Hengda went unanswered Tuesday.
The guarantees from Evergrande and Tianji Holding constitute direct, unconditional and unsubordinated obligations and rank on at least on an equal footing with the other unconditional and unsubordinated obligations of the guarantors, according to the people.
Five business days would be allowed if any failure to pay were due to administrative or technical error, though beyond that there would be no grace period, the people said.
The security is not listed on exchanges, according to the Bloomberg-compiled data. Bonds without such listings that were issued to pre-selected buyers rather than through a public offering are sometimes called private placements.
Evergrande’s next major public note to mature will be in March, part of $7.4 billion of securities due in 2022. Here’s the maturity schedule for those offshore and local notes issued by Evergrande and its units that come due next year, according to data compiled by Bloomberg:
|Issuer||Maturity in 2022||Amount Outstanding|
|China Evergrande Group||March 23||$2.03 billion|
|China Evergrande Group||April 11||$1.45 billion|
|Hengda Real Estate||July 8||8.2 billion yuan|
|Scenery Journey||Oct. 24||$2 billion|
|Scenery Journey||Nov. 6||$645 million|
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