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Jefferies Financial Group Inc.’s revenue jump — due to strong capital markets and rebounding investment banking — bodes well for the bigger banks due to report in weeks to come.
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Jefferies Financial Group Inc.’s revenue jump — due to strong capital markets and rebounding investment banking — bodes well for the bigger banks due to report in weeks to come.
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Oct 26, 2020
Bloomberg News
,(Bloomberg) -- To understand why some of China Evergrande Group’s strategic investors agreed to throw the embattled developer a $13 billion lifeline last month, look no further than their own sources of revenue.
Interior decorator Grandland Group Holdings Co.’s listed unit gets almost 58% of its sales from Evergrande. Hangzhou Robam Appliances’s sales jumped after deepening its cooperation with Evergrande. And the developer has been the largest source of revenue for door maker Beijing Jiayu over the last four years, according to company filings.
With such strong ties to the indebted real estate firm, many suppliers agreed to waive their rights to a combined $13 billion repayment just five days after Evergrande became embroiled in a crisis of confidence. The company warned in August it faced a potential default if it had to make the 130 billion yuan ($19 billion) payment to these backers by a Jan. 31 deadline, according to people familiar with the matter. Evergrande remains in talks with investors owed the remaining $6 billion.
As part of the new deal, several strategic investors agreed to keep their shares and not require the company to buy them out, according to a filing. The agreement turns their hybrid securities into common shares in Evergrande’s property unit, said Raymond Cheng, a property analyst at CGS-CIMB Securities. Company officials told investors in an Oct. 16 call organized by Bank of America Corp. that the new agreement doesn’t include any put options.
Traditional Backers
Evergrande didn’t immediately reply to requests for comment, nor did any of the companies listed below. Evergrande hasn’t spelled out which of the investors were included in the group that agreed to waive the $13 billion repayment. The photo taken last month to announce the deal included executives from Grandland, Suning Appliance, Jiayu, Robam and Zhejiang Youpon Integrated Ceiling.
Among the holdouts is Evergrande Group’s largest strategic investor, Shandong Hi-Speed Group, which is leaning toward demanding repayment of the $3.4 billion it’s sunk into the embattled developer, according to people familiar with matter.
Here’s a rundown of how many of these investors are intertwined with Evergrande:
©2020 Bloomberg L.P.