* Firm had said in Jan proposal would come within 6 months
* Won't meet March 31 deadline for audited 2021 results
* Planned deal with CITIC Trust, Guangzhou could provide
(Adds investor comment, executive comment on EV unit)
HONG KONG/BEIJING, March 22 (Reuters) - Embattled China
Evergrande Group will unveil a debt restructuring
proposal for its creditors by the end of July, it said on
Tuesday, after concerns about its financial health were renewed
by a delay in publishing its annual results.
Evergrande, whose $22.7 billion worth of offshore debt is
deemed to be in default, is seeking to "further enhance
communications" with creditors to reach the end-July target, its
executive director Siu Shawn told investors on a call.
Earlier on Tuesday, Evergrande said in a stock exchange
filing it would not meet a March 31 deadline to file its
financial results for 2021 because audit work had not been
The world's most indebted property developer, Evergrande
told investors in January it aimed to have a preliminary
restructuring proposal in place within six months.
A wave of defaults in China's property sector has rattled
investors and while state intervention has quelled market
concern over a disorderly collapse of Evergrande, investors are
still in the dark over whether they will recoup their money.
Evergrande, once China's top-selling developer and now
reeling under more than $300 billion in liabilities, defaulted
on some overseas bond payments in December and has struggled to
repay suppliers and creditors and complete projects and homes.
The developer set up a risk management committee in December
made up mostly of members from state enterprises, as the
Guangdong provincial government is leading the restructuring.
"With the broad support and understanding from the majority
of creditors ... we strive to release the preliminary
restructuring proposal by the end of July," Chen Yong, a member
of the committee, told investors.
As part of its plans to divest assets to repay some of its
offshore debt, the developer is working to sell its Yuen Long
land parcel in Hong Kong as well as the Evergrande Centre
commercial building, said Evergrande board member Liang Senlin.
Trading in shares of Evergrande, its property services unit
Evergrande Property Services Group Ltd, and electric
vehicle unit China Evergrande New Energy Vehicle Group Ltd
have been suspended since Monday.
Liang said on the investor call the developer was trying to
rope in strategic investors in both the electric vehicle and
property services units to restore value - a goal it has been
pursuing for roughly a year without much success.
Siu said the EV unit aimed to start mass production in June
of its inaugural electric car, the Hengchi 5 sport-utility
vehicle, after getting approval to start sales last week.
Some of the investors who attended the call were not
impressed with the assurances from management.
"They mainly explained why the trading of stocks is
suspended. There was no new information and the situation
remained the same," said a bondholder who was on the call,
declining to be named as he was not authorized to speak to the
A MODEL TO FOLLOW?
Earlier on Tuesday, two sources familiar with the matter
told Reuters that Evergrande planned to return land used as
collateral for a trust loan to the Guangzhou government,
providing a model for local authority involvement that could be
replicated for other indebted Chinese property firms.
The deal centers around a 3.25 billion yuan ($510.73
million) trust loan that CITIC Trust issued to Evergrande using
funds raised from investors, according to the sources and a
document reviewed by Reuters partially outlining the plan.
Under the plans, CITIC will return the land used as
collateral to Evergrande, which will then pass it on to the
Guangzhou city government to put up for sale, the sources said.
State-owned Guangzhou City Construction Investment group
will act as a guarantor of the loan and CITIC will repay the
principal amount to its investors within two years using funds
from the Guangzhou city government, the sources said.
The plan is still pending approval from the investors of the
trust loan, one of the people said.
If successfully implemented, this model of local government
and creditors working together to resolve Evergrande's debt
repayment issue could be replicated for other trust loans,
analysts said, and more state-owned city investment companies
may become involved in the firm's debt restructuring process.
Evergrande, CITIC and Guangzhou City Construction Investment
did not respond to requests for comment.
Trust companies, which pool money from wealthy investors,
are an important source of funding for Evergrande and other
property developers in China.
In a separate filing on Tuesday, Evergrande said its
Property Services Group had launched an investigation into how
banks seized 13.4 billion yuan in deposits that had been pledged
as security for third party guarantees.
The seizure of the funds, which the property services unit
discovered when it was preparing its annual report, underscores
the turmoil at Evergrande, which said it would hire King & Wood
Mallesons as an additional legal adviser.
($1 = 6.3634 Chinese yuan renminbi)
(Reporting by Shuyan Wang and Jing Xu in Beijing, Clare Jim in
Hong Kong and Jason Xue in Shanghai
Writing by Sumeet Chatterjee Editing by Christian Schmollinger
and Mark Potter)