SYDNEY: China Evergrande Group sold its luxury superyacht for about US$32 million earlier this year, said two sources, further shrinking the developer’s offshore assets as its cash crunch worsened and it scrambled to pull together a debt revamp plan.
Evergrande’s offshore bondholders are expected to sharpen their focus on offshore assets as the developer’s debt restructuring plan flounders with the founder now being investigated over suspected “illegal crimes”.
The debt restructuring process was further complicated this week after Evergrande said it was unable to issue new debt due to an investigation into its main China unit. Analysts have said delays to the debt restructuring raise the risk of the company being liquidated.
Evergrande sold the 60-metre superyacht Event for €30 million ($32 million) as part of a process to sell down non-core assets, said the two sources with knowledge of the matter, declining to be named as the information is not public yet.
A third source with knowledge of the matter confirmed the sale of the yacht.
A spokesperson for Evergrande did not immediately respond to Reuters request for comment.
With Evergrande founder and chairman Hui Ka Yan now under investigation, analysts and investors are questioning who will run the company’s operations and what will happen to the offshore debt restructuring plan.
Evergrande is the world’s most indebted developer with more than US$300 billion in total liabilities. Its financial woes, which first became public in 2021, has weighed on the Chinese economy as well as the global markets.
After defaulting on its dollar bond in late 2021, Evergrande has been in the process of seeking creditors’ approval for its proposals to restructure offshore debt worth US$31.7 billion, which includes bonds, collateral, and repurchase obligations.
Reuters reported on Tuesday that a major Evergrande offshore creditor group was planning to join a liquidation court petition filed against the developer if it does not submit a new debt revamp plan by the end of October.
Compared to its US$31.7 billion in total offshore liabilities, Evergrande has far fewer assets outside China. The sale of the superyacht, Event, means foreign creditors of the company will have fewer options in any potential liquidation process.
Event was delivered in 2013 and was given the World Superyacht Award in the following year, according to its Dutch manufacturer Amels website. It was estimated to be worth US$60 million in some Chinese media reports in the past two years.
Event was registered in Evergrande’s name, the sources said, which meant the proceeds would be returned to the developer, which has seen some of its own and the founder’s offshore assets divested or seized by lenders for defaulting on loans.
A Boeing private jet of Evergrande was sold in July last year for US$100 million, the sources said. Evergrande did not respond to a request for comment on the jet sale.
Reuters reported in 2021 Evergrande sold two Gulfstream jets, while the Wall Street Journal reported late that year that Evergrande raised more than US$50 million by selling two of its private jets to American aircraft investors.
Lenders to Evergrande’s Hong Kong headquarters appointed a receiver in September last year to seize the building and tender it for sale. The property was valued at HK$8-HK$9 billion (US$1-1.15 billion) at that time.
Of the remaining offshore assets of the company and its founder, creditors would need to establish whether they have already been used as collateral to raise funds.
Foreign bondholders’ “ability to get to these (offshore) assets is a function of the legal claim – has he (Chairman Hui) pledged it?” one source involved in the Evergrande legal process said.