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China Evergrande to repay debt with proceeds from strategic investors, cash - shareholders
June 15, 2017 / 10:16 AM / 6 months ago

China Evergrande to repay debt with proceeds from strategic investors, cash - shareholders

HONG KONG, June 15 (Reuters) - China Evergrande Group , the nation’s top property developer, on Thursday told shareholders it plans to redeem its debt using proceeds from strategic investors and internal cash, including perpetual bonds, according to people who attended the meeting.

Three shareholders who attended Evergrande’s annual general meeting in Hong Kong said Chief Financial Officer Pan Darong told them the company plans to submit a restructuring proposal to China Securities Regulatory Commission (CSRC) for a backdoor listing in two months.

The regulator would take three or four months to review the proposal, he added.

Evergrande declined to comment.

The company, which has the second-largest debt pile among Chinese corporates, said last week it wants to redeem all of its perpetual debt by this month-end, ahead of plan.

However, a few analysts said it was not clear how the redemption would be funded, and that additional debt to replace these bonds - classed as equity - could actually raise Evergrande’s gearing.

The company has raised 70 billion yuan ($10.30 billion) from strategic investors for most of its property assets, which are slated for a backdoor listing in Shenzhen, on conditions of repurchase obligation or compensation.

The company is seeking a backdoor listing valued at 198 billion yuan ($29 billion) in Shenzhen, aiming to take advantage of higher valuations commanded on the mainland due to a large pool of retail investors. The plan will make it easier for heavily indebted Evergrande to raise funds.

($1 = 6.7935 Chinese yuan)

Reporting by Doris Huang and Jasper Ng; Writing by Clare Jim; Editing by Sherry Jacob-Phillips

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