Business

Evergrande bondholders threaten to sue after being blindsided by €1.9bn claim

Move comes as mystery lenders take over funds at Chinese property group’s subsidiary

A group of bondholders is moving closer to formal legal action against China’s Evergrande. Photograph: Chan Long Hei/Bloomberg

Joe Rennison
Thomas Hale
Wed Mar 23 2022 - 15:15

A group of bondholders is moving closer to formal legal action against China's Evergrande after the world's most indebted property developer made a surprise disclosure that mystery lenders to one of its subsidiaries claimed more than $2 billion in cash.

A group of distressed debt investors in the US and Britain including Saba Capital, Redwood Capital Management and Ashmore have directed lawyers to begin work on the legal analysis needed to decide whether to take action against Evergrande, according to people familiar with the talks.

One person directly involved in the situation said investors feel they have “no choice” but to commence legal action and that plans were already prepared. “I think it has massively changed the game,” the person said about the $2 billion claim. “The atmosphere in the room is one of boiling blood.”

Saba Capital, Redwood and Ashmore all declined to comment.

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The developments come directly after Evergrande said on Tuesday that undisclosed lenders had taken over 13.4 billion renminbi (€1.9 billion) of deposits at Evergrande Property Services Group, its property services subsidiary, that were pledged as security for "third party guarantees".

Bondholders, who have held out hope of recovery on their losses through recourse to Evergrande’s Hong Kong-listed subsidiaries, say the move unfairly removes cash that could have been used to repay the company’s bonds. – Copyright The Financial Times Limited 2022

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