Original title: Evergrande encounters a double kill of stock and debt, newly hired financial consultant Hua Lian, trying to solve the liquidity dilemma.

Economic observation Network reporter Zhang Xiaohui Cai Yuekun September 16, 2021, Evergrande Real Estate Group Co., Ltd. (hereinafter referred to as "Evergrande Real Estate") of the existing bonds suspended for one day.

Earlier, Evergrande suffered a "double kill between stocks and bonds" due to the default of wealth management products of Evergrande Financial Wealth Management (Shenzhen) Co., Ltd. (hereinafter referred to as "Evergrande Wealth"), a wholly-owned subsidiary of Evergrande Financial Wealth Management (Shenzhen) Co., Ltd. (hereinafter referred to as "Evergrande Wealth"). The share price of China Evergrande Group Group (hereinafter referred to as "Evergrande") fell, and a number of bonds owned by Evergrande fell to less than 30 yuan per piece.

A week after Evergrande's wealth management products were exposed to default on Sept. 8, Evergrande's branches in many places encountered door-to-door representations from Evergrande Wealth investors demanding to pay for wealth management products. Du Liang, general manager of Evergrande Fortune, said the total amount of outstanding wealth management products was 40 billion yuan.

China Evergrande Group's shares fell sharply on Sept. 13, 14 and 15 and hit a new low of HK $2.79 on Sept. 15 before closing down 5.39% at HK $2.81. China Evergrande Group's share price fell 22% in three trading days. China Evergrande Group shares fell further on Sept. 16, closing at HK $2.62 at noon, with a total market capitalization of HK $34.7 billion.

It has fallen 90% from its high of HK $28 set on July 6, 2020.

A number of bonds fell below 30 yuan, and trading of all bonds was suspended for one day.

On September 15, a person from a leasing agency told the Economic Observatory that Evergrande Real Estate Group had a lease overdue for more than a month, and the repayment plan still failed.

On September 16, Evergrande Real Estate announced that the trading of all existing corporate bonds was suspended for one trading day from the opening of the market on September 16, and resumed trading on September 17, and the trading mode of the above-mentioned bonds was adjusted from the date of resumption of trading.

China Integrity International announced on September 16th that the liquidity tension of Evergrande Real Estate and its controlling shareholder China Evergrande Group Group continues to worsen, while increasing negative information has brought great obstacles to its normal production and operation. China Integrity International decided to lower the main credit rating of Evergrande Real Estate Group Co., Ltd from AA to A, and the debt credit rating of "15 Evergrande 03", "19 Evergrande 01", "19 Evergrande 02", "20 Evergrande 01", "20 Evergrande 02", "20 Evergrande 03", "20 Evergrande 04", "20 Evergrande 05" and "21 Evergrande 01" from AA to A And the main body and the credit rating of the above-mentioned debt will continue to be included in the watch list for possible downgrade.

Affected by various factors such as overdue debt, the prices of a number of Evergrande bonds have plummeted in recent days, hitting an all-time low.

On September 15, the price of 20 Evergrande 02 fell 21.43%, a record low of only 22 yuan per piece, meaning that compared with the highest point, Evergrande 01 also suffered a sharp drop on the 15th, falling by more than 16%, and the price was only quoted at 24.991 yuan per piece. The price of Evergrande 03 also hit an all-time low of 27 yuan per piece, down from its peak of more than 75%. The price of Evergrande 03 also hit an all-time low, only 27 yuan per piece, and 73% of the higher point.

What worries creditors is that Evergrande has an interest-bearing debt of more than 410 billion yuan.

According to the semiannual report on corporate bonds disclosed by Evergrande Group on August 31, by the end of the reporting period, the issuer's interest-bearing debt balance was 410.309 billion yuan, of which the corporate credit bond balance was 50.881 billion yuan, accounting for 12.40% of the interest debt balance; the company's overseas dollar debt balance is 33.557 billion yuan. Among the corporate credit bonds, the balance of corporate bonds is 50.881 billion yuan, and a total of 16 billion yuan of corporate credit bonds will be repaid in the coming year, including 0 billion yuan of maturing corporate bonds and 16 billion yuan of resale corporate bonds.

China Integrity International believes that the increase in litigation with suppliers, the suspension of some projects and the proposed sale of assets indicate that the cash flow tension of Evergrande Real Estate and Evergrande Group has further aggravated. and due to price cuts and sales costs and other factors led to a substantial deterioration of its profit situation, Evergrande Real Estate and Evergrande Group debt succession and repayment facing a significant increase in uncertainty. If the future period of assets, equity sales and loan renewal, extension and other matters do not meet expectations, Evergrande real estate and Evergrande Group liquidity pressure may be further increased.

Varian is a restructuring expert.

As incidents such as overdue corporate debt continue to occur, Evergrande has hired financial advisers to help deal with liquidity problems.

China Evergrande Group announced on Sept. 14 that the company expects property contract sales to fall sharply in September and that the liquidity problems encountered by the company have not been improved, and hired NYSE:HLI (hereinafter referred to as "Warlian") and Zhonggang Capital Co., Ltd. as joint financial advisers of the company.

China Evergrande Group said that the joint financial advisers will work with the company to evaluate the company's current capital structure, study the liquidity situation, explore all feasible options to alleviate the current liquidity problems, and strive to reach the optimal solution for all stakeholders as soon as possible.

Hualian is a world-famous investment bank focusing on mergers and acquisitions and restructuring.

Hualian is a US-based international investment bank with rich knowledge and experience in mergers and acquisitions, capital markets, fairness advice, valuation and financial restructuring, according to its website. Hualian has offices in the United States, Europe, the Asia-Pacific region and the Middle East, and is committed to providing professional consulting services to companies, institutions and governments around the world. Independent advice and expertise are Hualian's core strengths in the field of investment banking. Hualian has been selected as the first US M & An adviser for the past five consecutive years, the first global investment bank restructuring adviser for six consecutive years, and the first global M & A fairness advisor in the past 20 years.

Hualian has two offices in Beijing and Hong Kong in China, of which the Beijing office was established in 2008. Hualian China team focuses on cross-border mergers and acquisitions, financial restructuring, corporate financing and independent financial consulting.

It is unclear whether China Evergrande Group, who used to be the trader of Enron in 2001 and Lehman Brothers bankruptcy restructuring in 2008, will be able to ease Evergrande's current debt crisis by hiring Wallian as a financial adviser.

Another joint financial adviser, Zhong Gang Capital, served as Blu-ray Development, a real estate company that also exposed the debt crisis.(600466.SH) and Huaxia Happiness(600340.SH)'s financial advisor.

Evergrande's property sales revenue has declined in double digits. According to China Evergrande Group's announcement on September 14, the company's property sales revenue in June, July and August in 2021 was 71.63 billion yuan, 43.78 billion yuan and 38.08 billion yuan respectively, showing a downward trend.

China Evergrande Group said that September is usually the peak of property contract sales in the real estate industry in China. However, as the continued negative news reports on the Group seriously affected the confidence of potential home buyers, the company expects sales to continue to decline significantly in September. This has led to the continued deterioration of the Group's sales rebates, further exerting tremendous pressure on cash flow and liquidity.

To address the liquidity problem, China Evergrande Group is considering selling a number of assets, including shares in China Evergrande New Energy Vehicle (708.HK) and Evergrande Property Services (6666.HK), as well as the sale of China Evergrande Group Center, an office building in Hong Kong.

However, affected by adverse rumors, China Evergrande New Energy Vehicle's stake has become worthless. The share price has fallen from HK $70 in April to HK $3.41 now, and 95 per cent of the market capitalization has gone up in smoke. Evergrande Property Services has also fallen from HK $19.74 in February to HK $4.01 a share now.

After considering selling the shares of China Evergrande New Energy Vehicle and Evergrande Property Services, the market began to spread rumors that Evergrande was about to go bankrupt.

Evergrande Group posted a statement on its official website on September 13: "the recent remarks on the Internet about Evergrande's bankruptcy and restructuring are completely untrue." At present, the company has indeed encountered unprecedented difficulties, but the company is determined to fulfill its main corporate responsibility, go all out to resume work and production, guarantee the delivery of the building, do everything possible to restore normal operation, and try its best to protect the legitimate rights and interests of customers. "

In the Evergrande wealth payment storm, Evergrande Group put forward a "house for debt" payment plan on September 12, with a 40 billion outstanding financial management scale, which put new pressure on Evergrande Group.

It is unclear whether Evergrande can weather the liquidity crisis with the help of newly hired financial advisers Wallian and Zhong Kong Capital.