China’s troubled real estate giant Evergrande Group reportedly sold the luxury superyacht of its founder Hui Ka Yan, the Event, for approximately $32 million, according to Reuters. This move is seen as an effort to liquidate the company’s offshore assets amidst its escalating financial crisis and ongoing efforts to devise a debt restructuring strategy. The offshore bondholders are intensifying their scrutiny of Evergrande‘s offshore holdings.
The situation is further exacerbated by the investigation into the company’s founder for alleged “illegal activities.”The company’s debt restructuring was dealt another blow when Evergrande announced its inability to secure new debt due to an ongoing probe into its primary China-based division. This has led to concerns among analysts about potential liquidation if the restructuring is further delayed.
The 60-meter superyacht was sold for 30 million euros ($32 million) as Evergrande aimed to divest its non-essential assets. The investigation into Evergrande‘s founder, Hui Ka Yan, has raised questions about the company’s future leadership and the fate of its offshore debt restructuring initiative. Evergrande, with over $300 billion in liabilities, is the world’s most indebted property developer. Its financial troubles, which surfaced in 2021, have impacted both the Chinese economy and global markets.
Evergrande defaulted on its dollar bond in late 2021 and has been working to gain creditor approval for its $31.7 billion offshore debt restructuring proposal. However, if Evergrande fails to present a new debt restructuring plan by October’s end, some major offshore creditors are considering joining a liquidation court petition against the company.
Given Evergrande‘s limited offshore assets compared to its liabilities, the sale of the Event yacht indicates that foreign creditors may have limited recourses in the event of a liquidation.
The Event, built in 2013 and awarded the World Superyacht Award in 2014, was previously valued at around $60 million. The proceeds from its sale are expected to go back to Evergrande, which has had several of its assets either sold or seized due to loan defaults. In addition to the yacht, Evergrande sold a Boeing private jet for $100 million in July of the previous year. Other asset sales include two Gulfstream jets in 2021 and two private jets to American investors, fetching over $50 million.
Evergrande’s Hong Kong headquarters was seized and put up for sale last September, with an estimated value of HK$8-HK$9 billion ($1-1.15 billion). As for the company’s remaining offshore assets, creditors will need to determine if they’ve already been pledged as collateral.
The ability of foreign bondholders to access these offshore assets largely depends on their legal claims and whether they’ve been previously pledged by Chairman Hui, as noted by a source involved in the legal proceedings.