China Evergrande Halts Hong Kong Trading

Embattled property giant China Evergrande Group and its subsidiary units suspended trading in Hong Kong on Monday morning, according to exchange filings, without offering any explanation.

Evergrande, the world’s most indebted developer with over $300 billion in liabilities, has been struggling to repay its suppliers and creditors. On February 25, Evergrande sold stakes and “right to debt” in four developments to two state-owned trust firms. These trust firms will be responsible for the construction and delivery of properties to home-buyers, and any surplus from property sales will be used to repay the initial capital contributed by Evergrande. The deal also gives Evergrande the right to repurchase equity interest in the projects.

Through the deals, Evergrande can recover around 1.95 billion yuan ($306 million) of the initial capital contributed, and settle around 7 billion yuan of liabilities in the projects. “The contribution amount recovered will have a positive impact on the group’s efforts in both debt settlement and guarantee of property delivery of other projects,” Evergrande said.

Since the beginning of this year, Evergrande has successively transferred shares in several real estate projects. The firm does not receive much net income from these deals, and its main goal is to deliver buildings to home-buyers. “About 600,000 sets of buildings covering 70 million square meters should be delivered in 2022, which is equivalent to nearly 50% of buildings of the group,” its founder Xu Jiayin said in a meeting held in February.

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In addition, the group’s flagship unit, Evergrande Real Estate Group Co., Ltd., secured approval from its onshore bondholders over the weekend to defer coupon payments due last September until September 2022, according to the company’s filing to the Shenzhen Stock Exchange on Sunday.