exist a filing The developer told the Hong Kong Stock Exchange on Thursday that it had “received notification from relevant authorities” that Xu “has been subject to compulsory measures in accordance with the law due to suspected illegal crimes.” The developer will suspend trading “until further notice”.
The admission confirms previous reports that the billionaire developer had been detained in some form by police. On Wednesday, Bloomberg reported that Chinese law enforcement authorities placed Mr. Xu under “residential surveillance,” a measure that confines him to one location and prohibits unauthorized contact with the outside world. (Such measures last no longer than six months and do not always result in criminal charges, according to Bloomberg).
Evergrande’s stock price returned to the market only a month ago, and trading resumed on August 28. During this period, Evergrande’s share price fell more than 80%, from US$0.21 to US$0.04. (Evergrande shares traded at about $4 at their peak in 2017).
Evergrande is at the heart of China’s real estate crisis, which has affected other real estate giants such as Country Garden. Evergrande was once one of China’s largest developers, providing large amounts of debt to finance its expansion. However, Beijing’s new rules aimed at encouraging developers to reduce risks have triggered a liquidity crisis.
As funding dried up, Evergrande defaulted on its debt in December 2021, leading other developers to default as well.
Evergrande lost a total of $81 billion in 2021 and 2022, according to financial results released earlier this year as it prepared to resume stock trading.
In August, the company said it lost another $4.5 billion in the first half of 2023, with liabilities of $327 billion and assets of $238 billion, according to an exchange filing when the stock resumed trading in August.
Evergrande had a very bad week
Evergrande’s trading suspension capped days of bad news. On Friday, the company canceled a key meeting with creditors where they would review its debt restructuring plan. The company said delayed sales were lower than expected.
Then, on Sunday, Evergrande revealed it would not be able to Issue new debt, as regulators investigate its main domestic subsidiary.On Monday, China exported Caixin Law enforcement authorities detained Evergrande’s former chief executive and chief financial officer, as well as other senior executives, as part of an investigation into whether the company misused funds, the report said.
Finally, Monday, Evergrande missed another bond paymentthis time a RMB bond worth $547 million.
It won’t take long for Evergrande to find a solution. On October 30, the Hong Kong court will hold a hearing on the “liquidation petition”. If the hearing is successful, the company will be liquidated.
Some overseas creditors revealed that some Evergrande lenders were ready to give up Reuters If Evergrande does not come up with a feasible restructuring plan by the end of October, they will be ready to support liquidation.
Svlook
