China Evergrande faces even more mounting pressure with western distressed debt investors reportedly considering legal action over a recently discovered security pledge for more than $2 billion with unnamed banks.
A group of U.S. and U.K. distressed debt investors are seriously considering whether to take action against Evergrande, according to a «Financial Times» report citing unnamed sources, over the recently discovered pledge of more than $2 billion for «third party guarantees» with unnamed lenders.
The investors involved include Saba Capital, Redwood Capital Management and Ashmore.
Evergrande held a call with investors last night but few details were disclosed, the report added.
$2 Billion Seizure
The consideration of legal action follows Tuesday’s revelation when Evergande announced that undisclosed lenders had seized 13.4 billion yuan ($2.1 billion) of deposits at its property services unit which was pledged as security.
Bondholders argue that the surprise move unfairly removes cash from the firm which could have been used for repayments of liabilities that total more than $300 billion worldwide.
In January, a group of international bondholders hired law firm Harneys in an effort to «seriously consider enforcement actions» against Evergrande for failure to engage with them.
