Embattled China Evergrande Group will unveil a debt restructuring proposal for its creditors by the end of July, it said on Tuesday, after concerns about its financial health were renewed by a delay in publishing its annual results.

Evergrande, whose $22.7 billion worth of offshore debt is deemed to be in default, is seeking to "further enhance communications" with creditors to reach the end-July target, its executive director Siu Shawn told investors on a call.

Will Miss March 31 Audit Deadline

Earlier on Tuesday, Evergrande said in a stock exchange filing it would not meet a March 31 deadline to file its financial results for 2021 because audit work had not been completed.

The world's most indebted property developer, Evergrande told investors in January it aimed to have a preliminary restructuring proposal in place within six months.

A wave of defaults in China's property sector has rattled investors and while state intervention has quelled market concern over a disorderly collapse of Evergrande, investors are still in the dark over whether they will recoup their money.

Evergrande, once China's top-selling developer and now reeling under more than $300 billion in liabilities, defaulted on some overseas bond payments in December and has struggled to repay suppliers and creditors and complete projects and homes.

The developer set up a risk management committee in December made up mostly of members from state enterprises, as the Guangdong provincial government is leading the restructuring.

"With the broad support and understanding from the majority of creditors ... we strive to release the preliminary restructuring proposal by the end of July," Chen Yong, a member of the committee, told investors.

As part of its plans to divest assets to repay part of its offshore debt, the developer is working to sell its Yuen Long land parcel in Hong Kong as well as the Evergrande Centre commercial building, said Evergrande board member Liang Senlin.

Model for Other Conglomerates' Debt

Earlier on Tuesday, two sources familiar with the matter told Reuters that Evergrande planned to return land used as collateral for a trust loan to the Guangzhou government, providing a model for local authority involvement that could be replicated for other indebted Chinese property firms.

The deal centers around a 3.25 billion yuan ($510.73 million) trust loan that CITIC Trust issued to Evergrande using funds raised from investors, according to the sources and a document reviewed by Reuters partially outlining the plan.

Under the plan, CITIC will return the land used as collateral to Evergrande, which will then pass it on to the Guangzhou city government to put up for sale, the sources said.

State-owned Guangzhou City Construction Investment group will act as a guarantor of the loan and CITIC will repay the principal amount to its investors within two years using funds from the Guangzhou city government, the sources said.

The plan is still pending approval from the investors of the trust loan, one of the people said.

If successfully implemented, this model of local government and creditors working together to resolve Evergrande's debt repayment issue could be replicated for other trust loans, analysts said, and more state-owned city investment companies may become involved in the firm's debt restructuring process.

Evergrande, CITIC and Guangzhou City Construction Investment did not respond to requests for comment.

Trust Companies Central to Developers

Trust companies, which pool money from wealthy investors, are an important source of funding for Evergrande and other property developers in China.

In a separate filing on Tuesday, Evergrande said its Property Services Group had launched an investigation into how banks seized 13.4 billion yuan in deposits that had been pledged as security for third party guarantees.

The seizure of the funds, which the property services unit discovered when it was preparing its annual report, underscores the turmoil at Evergrande, which said it will hire King & Wood Mallesons as an additional legal advisor.

($1 = 6.3634 Chinese yuan renminbi)