Debt-laden developer, China Evergrande Group, plans to propose an offshore debt restructuring plan next month. It is expected to use domestic assets to persuade creditors to approve its plan.

According to the Central News Agency, Evergrande is taking stock of available onshore assets in China that have not been mortgaged, including the stocks of two companies listed in Hong Kong. The company would use them as sweeteners to win approval from overseas creditors for the restructuring plan.

Faced with a huge debt mountain, Evergrande originally planned to release a debt restructuring plan at the end of July.

However, the ailing developer announced at the end of June that the release would be postponed as it sought to reach a deal with the creditors. It pledged to submit the plan by the end of this year.

An executive director of Evergrande Group said some days ago that the current scale of Evergrande’s offshore debt is about $22.7 billion, which is part of the group’s overall debt. The executive pointed out that one of the essential prerequisites for completing the restructuring plan is that the company can continue to operate.

Reuters, citing sources, said that Evergrande would start negotiating the restructuring terms in December.

Like other Chinese developers, Evergrande has few assets abroad to use in its offshore debt restructuring.

Evergrande would be the first Chinese developer to offer onshore assets as additional credit enhancement to offshore bondholders if the plan is accepted.

The sources said that Evergrande and its bondholders are still trying to determine what domestic assets could be offered as credit enhancement tools. 

According to Reuters, the domestic asset plan provided by Evergrande to offshore creditors may include the stocks of two Hong Kong-listed units.

The sources said that Evergrande would sign non-disclosure agreements with creditors within this month to prepare for negotiation next month, and the restructuring plan will be finalized early next year.

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