Clare Jim and Julie Zhu

HONG KONG (Reuters – Evergrande Group chief executive, is meeting in Hong Kong with investors banks and creditors to talk about a possible restructuring of assets and sale, according to two sources. The talks are taking place as Evergrande Group battles against the default on debts totalling more than $300 billion.

Reuters has learned that Evergrande’s CEO Xia Hajun has spent more than two years in Hong Kong. The source said that he is a close confidant to chairman Hui Ka Yan.

Another source claimed that Xia had been talking with banks and creditors in Hong Kong. However, he did not specify what was being discussed.

Shenzhen-headquartered Evergrande, which is reeling under more than $300 billion in liabilities, has left its offshore investors in the dark about repayment plans after already missing three rounds of interest payments on its dollar bonds.

Previously, there was no report on Xia’s discussions with Hong Kong creditors and investment banks.

Sources said that Xia had to talk with foreign banks about loan repayments and extension. The source refused to reveal the identities of creditors Xia spoke to over the past days.

“Xia needs to figure out how many offshore debts the group has, as many of them were underwritten at subsidiary level and he might not know about (that),,” he stated. They must talk with bondholders before they can work on restructuring.

Evergrande tried to liquidate some of its assets as a way to raise funds, but it has not been a success. This is because there are growing worries about Evergrande’s possible collapse and how that will affect global markets and China’s economy.

Reuters reports that Yuexiu Property, a Chinese state-owned property company, has pulled out from a $1.7 billion agreement to purchase Evergrande’s Hong Kong Headquarters Building. This was due to concerns about Evergrande’s financial condition.

According to a Chinese official, the impact of Evergrande’s debt troubles on the banking sector was manageable. The risk exposures for individual financial institutions weren’t large.

Reuters reached out to Evergrande, Xia but they did not reply.

Because of the sensitive nature and importance of this matter, sources with direct knowledge declined to name the source.

PUBLIC APPEARANCE

Evergrande Chairman Hui is not seen in public these weeks and hasn’t announced any plans to fix the group’s problems. This leaves investors wondering whether they will have to take losses after the end of the month’s grace period for non-paid bonds coupons.

The developer released a statement last month stating that Hui had asked company executives for quality deliveries of properties as well as the redemption of wealth management products.

Xia is the vice president of Evergrande and was also a member of the board in 2007. According to company website, he is responsible for Evergrande’s capital operations and management as well as legal and international affairs.

According to one source, he has been living in Hong Kong from July. According to the second source, Xia was visiting Chinese investment banks in Hong Kong for possible asset sales.

Evergrande (once China’s number one-selling developer) has stated it will be selling stakes in certain assets to help raise money.

Hopson Development will sell 51% (or $5.57 billion) of Evergrande Property Services to the developer.

Investment bank Moelis (NYSE:) & Co and law firm Kirkland & Ellis, representing bondholders who currently hold $5 billion worth of Evergrande nominal offshore bonds, demanded last week more information and transparency from Evergrande.

As it warns of potential default risks in the midst of plunging property prices, Houlihan Lokey (NYSE) and Admiralty Harbour Capital were appointed as its joint financial advisers last month.

($1 = 7.7792 Hong Kong dollars)