China Evergrande Group, the world's most indebted developer, made significant strides in 2022, reducing its losses as it focused on selling properties and cutting costs.
According to the company's annual 2022 report published recently, Evergrande's net loss for the year was 105.91 billion yuan ($14.51 billion), a notable improvement from the loss of CNY476.04 billion recorded in 2021. While revenue dipped from CNY250.01 billion to CNY230.07 billion during the same period, the overall performance reflects a positive trend.
In 2021, Evergrande faced a cash-flow crisis that led to debt payment defaults and non-payment to contractors and suppliers. The property sector's leverage crackdown in China further exacerbated the situation, causing a decline in home sales and restricted access to the debt market for many real estate developers.
As of the end of 2022, Evergrande's total liabilities amounted to CNY2.44 trillion. To safeguard the interests of various creditors, the company is taking steps to expedite the restructuring of offshore debt and implement other necessary measures.
An essential milestone in this debt restructuring process was reaching an agreement on $19 billion in bonds after engaging in lengthy negotiations with international creditors. This move demonstrates Evergrande's commitment to finding sustainable solutions to its financial challenges.
Despite the obstacles faced, Evergrande's efforts in 2022 show progress towards stabilizing its operations and putting itself on a path to recovery. These developments signal potential opportunities for stakeholders and highlight the company's dedication to addressing its financial obligations responsibly.
Evergrande Offers Options to Debt Holders
Holders of the developer's foreign debt now have the choice to either exchange their holdings for new, long-term debt or accept some principal losses and receive a combination of shorter-term bonds and equity-linked notes. These notes are backed by shares of Evergrande or two of its listed subsidiaries, including Evergrande Auto.
Focus on Key Tasks
Evergrande has expressed its commitment to ensuring the smooth and orderly progress of important tasks. This includes guaranteeing the delivery of properties, as well as maintaining the continuous operation of their new-energy vehicles and property services.
To address the risks it currently faces, Evergrande is exploring options such as selling or effectively utilizing some of its core assets.
In a separate filing to the Shanghai Stock Exchange, Evergrande's onshore unit, Hengda Real Estate Group, announced that it is under investigation by the China Securities Regulatory Commission for potential breaches of information disclosure laws and regulations. Hengda affirmed its active cooperation with the investigation.
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