Evergrande Lowballs Bond Holders With Buyout Offer

Evergrande Real Estate Group, one of China’s five largest real estate developers is adopting an aggressive approach to renegotiating its current debt commitment as the nation’s real estate firms search for ways to continue to financing their businesses amidst a government crackdown.

The company made a controversial compensation offer to existing bondholders recently, which appears aimed at making it easier for the Guangzhou-based firm to take on further debt.

According to a story in the International Financial Review,

The property developer’s consent solicitation, which expires on Friday at 5pm in New York (22:00 GMT), offers holders of bonds due 2015 and 2016 just 37.5 cents for every US$100 of principal in return for bringing the terms of the notes in line with Evergrande’s most recent US dollar offering.

Market observers noted that Evergrande’s compensation offer for revising the notes would allow Evergrande to expand its debt load, potentially affecting the value of bonds currently held by investors.