BARRON’S: China’s Evergrande Restructuring: What’s The Plan?

By AFP

A state bailout would ‘run counter’ to Beijing’s efforts to deflate a worrying property bubble so as to reduce the economy’s reliance on the real estate sector, added Larry Ong of SinoInsider.

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Beijing could also get state-owned enterprises to buy Evergrande assets and entrust local governments to oversee restructuring work, Ong said.

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Ong said Beijing could also compel Evergrande and its billionaire founder Hui Ka Yan to sell assets to pay down debt.

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China has in recent years completed restructurings via government takeovers of cash-strapped conglomerates including Anbang Group, Tomorrow Group and its related Baoshang Bank, as well as HNA Group.
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In such cases, regulatory teams came in to take over and manage operations for between one and three years.

But Ong of SinoInsider said that model may not work given the scale and complexity of Evergrande’s woes.

‘There are no comparable precedents for what could happen to Evergrande,’ he said.