Chinese real estate developer China Evergrande Group again defaulted on overdue interest payments on December 6, 2021. The previous Friday, the company officially admitted for the first time that it was in serious financial trouble. The real estate giant’s debts now amount to more than $ 300 billion. In cooperation with DMSA Deutsche MarktScreening Agentur GmbH, a creditor prepared an insolvency claim against Evergrande Holding. Now, other activists are wanted before the request is filed with the court.
A bondholder of the China Evergrande group, Financial Market Partners Capital (FMPC) Consulting AG, based in Liechtenstein, has been preparing an insolvency claim against Evergrande Holding, registered in the Cayman Islands, since November 22. FMPC Consulting AG has been supported and advised by DMSA Deutsche MarktScreening Agentur GmbH, among others. (Note to editors: more information about FMPC Capital AG and its investment in Evergrande bonds can be found at the end of this press release).
In the meantime, the application has been completed and can be filed at any time with the Grand Court of the Cayman Islands in George Town. Since FMPC Consulting AG sees itself as the administrator of all Evergrande’s international creditors and in order to reduce the cost risk for each claimant, the company offers other international creditors to join its proceedings.
On Tuesday, December 7, the Bloomberg News Agency reported that two holders of US dollar bonds issued by Evergrande’s subsidiary, Scenery Journey, said they had not received an interest payment to the end of the 30-day grace period. A total of $ 82.5 million in interest would have been due by December 6.
Previously, in the case of non-performing bonds issued by conglomerate Evergrande, the international media had repeatedly reported that interest payments were made at the last second after all. “However, these reports have not been confirmed to us either by Evergrande itself or by the bond paying agents,” says Dr Marco Metzler, Chairman of the Board of FMPC Consulting AG and Senior Analyst at DMSA Deutsche MarktScreening Agentur GmbH . “In this regard, the current Bloomberg reports represent a further worsening of the situation,” continued Dr Metzler. An aggravation with announcement: already Friday, December 3, Evergrande had officially admitted for the first time in a statement to the Bourse – the original stock exchange of the holding company – that there was “no guarantee that the group will have funds sufficient to continue to meet its financial obligations “.
âThis official statement alone confirmed our assessment of the absolutely dire financial situation of the Group,â says Dr Marco Metzler, Chairman of the Board of FMPC Consulting AG and Senior Analyst at DMSA Deutsche MarktScreening Agentur GmbH. He finds the default of interest unsurprising for another reason: âWe still have not received default interest on our bonds – which should have been paid by November 10 at the latest. And this despite the fact that it has been widely reported in the insist that the interest owed to international investors has been paid. In Dr. Metzler’s opinion, the official declaration of December 3 and the last interest payment default on December 6 for the Evergrande subsidiary bond represent two default events for both of the 23 international bonds outstanding from Evergrande conglomerate with a face value of $ 23.7 billion. “Almost all will be lost,” fears Dr Metzler.
Michael Ewy, Managing Director of DMSA Deutsche MarktScreening Agentur GmbH, adds: âWith the insolvency claim that we helped prepare, we are now trying to save what can be saved for FMPC Consulting AG and other international creditors. The fear of financial analyst Metzler: âEvergrande is insolvent, but officially not yet insolvent. With the default on a bond now confirmed in the press for the first time, the management of the Evergrande holding must file for bankruptcy if it does not want to be guilty of dragging its feet. However, as this request has not yet been made, we – DMSA and FMPC Consulting – are concerned that assets may be withdrawn from the insolvency estate. “
âIn view of all these developments, it was right to start preparing an insolvency claim against Evergrande as early as the end of November,â explains Dr Marco Metzler in his capacity as Chairman of the Board of FMPC Consulting AG. He invites relevant international investors to join the application. The claim is due to be filed with the appropriate court in George Town in the coming days. Upon acceptance of the insolvency request, an insolvency administrator will begin to liquidate the Evergrande group and liquidate assets for investors and creditors. âThe prices of all Evergrande securities – stocks and bonds – will drop to practically zero in the process,â predicts senior analyst Metzler. “But all troubled sales beginning with the filing date can then also be canceled.”
However, senior DMSA analyst Metzler believes there is little hope for Evergrande’s turnaround. “The restructuring analysis of Fitch Ratings – my former employer and one of the three largest rating agencies in the world – assumes that Evergrande would be liquidated at a zero to ten percent restructuring rate.” This means that creditors would get back at most a tenth of the capital they invested, if access to assets in China is even possible.
âThe fact that the Chinese government has now sent senior state officials to the Evergrande boardroom and thus de facto controls the group does not necessarily mean that all claims – especially those from foreign investors – will also be treated “, fears Dr Metzler. Rather, he considers it likely that the inevitable insolvency of Evergrande will lead to a host of other bankruptcies. “To avoid internal disturbances, China would then be forced to return to an uncompromising Communist approach,” concludes Dr Metzler. In his view, this would ultimately imply that all of China’s international debt, which stood at around $ 585 billion, would no longer be repaid, and that the equity investments of foreign investors would be around $ 600 billion. dollars should also be completely canceled – with devastating consequences for the global banking industry. system and the whole world economy.
“Supply chains would be even tighter than they already are today. This, in turn, would inevitably lead to soaring inflation in the United States, Europe and other countries. As a result, there would be extreme distortions in the global financial system – with bankruptcies of players who are still considered strong today, “fears Dr Metzler.” Triggered by a Chinese financial virus called Evergrande, the world could face a ‘big reset’, the final collapse of the current global financial system. “
About Financial Market Partners Capital (FMPC) Consulting AG:
Financial Market Partners Capital (FMPC) Consulting AG, is a private investment and advisory firm based in Ruggell, Liechtenstein. As a single family office, FMPC Consulting AG invests exclusively the equity of its owner, the Metzler family.
About FMPC Consulting AG’s Evergrande investment:
FMPC Consulting AG owns 200 shares of the EVERRE 10 1â2 bond, April 11, 2024 (ISIN: XS19 8204 0641) with a par value of US $ 200,000. These were purchased on November 1, 2021 for US $ 50,000 via the in-house bank of FMPC Consulting AG and have since been held at SIX Switzerland via the in-house bank in Liechtenstein. Already on October 11, 2021, an interest payment for this bond had been missed. The general conditions of the obligation provide for this case: If the payment of accrued interest is not made on the effective payment date, but still during the 30-day grace period, this interest payment is to be credited to the seller of the obligation. If, on the other hand, the payment of accrued interest is made after the grace period (grace period), it is credited to the buyer upon payment. This means that if payment is made after the grace period – in this case after November 10, 2021 – this payment must be made to FMPC Consulting AG for securities held by FMPC Consulting AG. Contrary to the widespread rumor of alleged interest payments, this has not happened to date.
FMPC Consulting AG therefore requested an official statement on the interest payments of Clearstream and Citibank as paying agents for the bond more than a week ago. This official statement has not been received by FMPC Consulting AG to date.
About DMSA Deutsche Markt Screening Agentur GmbH:
The research house, which has the same owner as FMPC Consulting AG, the Metzler family, sees itself as an advocate for consumers, private clients and private investors. For them, DMSA gathers important and relevant information for the decision and prepares it in an easily understandable way. DMSA works with FMPC Consulting AG as required.
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