Real estate giant China Evergrande suspends operations in the Hong Kong market
The company’s stock price has plunged about 80% since the start of the year as it is on the verge of collapse as it struggles under a mountain of debt.
“Trading in shares of China Evergrande Group will be halted,” he said in a statement to the stock exchange. “Accordingly, all structured products relating to the Company will also be suspended from trading at the same time.”
Shares in his electric vehicle company, which last week canceled a listing proposal in Shanghai, were not suspended, although they fell 6% at the start of trading.
Company officials are struggling to cope with a crisis that has left it with more than $ 300 billion in debt, fueling fears of contagion to the wider Chinese economy which some say could spill over into the future. spread globally.
Last week, she announced she would sell a $ 1.5 billion stake in a regional Chinese bank to raise much-needed capital, as she struggles to pay interest to bondholders.
Beijing has been silent on the struggles of the real estate empire, but state media followed various responses in a nod to the mood towards a private company that grew on a debt spree during the boom years. of Chinese real estate.
The company has hired experts, including financial services firm Houlihan Lokey, which advised the restructuring of Lehman Brothers during the global financial crisis as it tries to avoid a collapse.
State regulators have also dispatched a team of financial advisers to assess the company, according to the reports.
The company struck a deal last month to pay interest on a national bond, but there has been no news regarding repayments of two offshore notes, although it has a 30-day grace period before it. that it is not considered in default.
“The first obligation will be to ensure that the homeowners who have purchased these homes take delivery and are fully repaired,” said Bruce Richards, CEO of Marathon Asset Management. “At the very end of the pecking order are the offshore bondholders.”
The liquidity crunch has sparked public anger and rare protests outside its offices in China as investors and suppliers demand their money back.
The group admitted facing “unprecedented challenges” and warned it might not be able to meet its commitments.
The country’s real estate sector has come under scrutiny in recent months, with regulators last year announcing caps on three different debt ratios under a program dubbed “three red lines.”