China Evergrande Group, the world’s most indebted developer, reportedly sold its luxury superyacht, named “Event,” for approximately $32 million earlier this year. The sale is part of Evergrande’s efforts to sell off non-core assets amid its worsening cash crunch and ongoing debt restructuring plan. The company’s offshore bondholders are now expected to focus on its offshore assets as they assess the feasibility of the debt restructuring plan.
The sale of the superyacht comes at a precarious time for Evergrande, as founder and chairman Hui Ka Yan is currently under investigation for suspected illegal activities. This has raised concerns among analysts and investors regarding the company’s future operations and the fate of its offshore debt restructuring plan.
Evergrande’s financial troubles have had significant implications for the Chinese economy and global markets. With over $300 billion in total liabilities, the company’s default on its dollar bond last year has put it at risk of liquidation. The delayed debt restructuring process only exacerbates these risks.
Compared to its $31.7 billion in offshore liabilities, Evergrande has limited assets outside of China. The sale of the superyacht further limits the options for foreign creditors in the event of a potential liquidation process. The superyacht, known as Event, was delivered in 2013 and was awarded the World Superyacht Award the following year. It was estimated to be worth $60 million in previous reports.
Foreign creditors will now have to determine whether any remaining offshore assets have already been used as collateral to raise funds. The ability of these creditors to access these assets depends on the legal claims and any pledged collateral by Chairman Hui.
Evergrande has previously sold other assets, including a Boeing private jet sold for $100 million in July last year. The company’s Hong Kong headquarters were also seized by lenders, who appointed a receiver to sell the property. The remaining offshore assets, including assets belonging to Chairman Hui, will come under scrutiny as creditors seek to retrieve their funds.
The ongoing debt restructuring plan and investigation into Evergrande’s founder cast uncertainties over the company’s future. As the offshore bondholders grapple with these uncertainties, the sale of the superyacht underscores the challenging financial situation facing the embattled developer.