2023-08-28 22:29:06
The listing of the over-indebted Chinese promoter Evergrande resumed Monday on the Hong Kong Stock Exchange, where the title fell by around 80%, following 17 months of suspension for non-publication of its financial results.
The stock plunged nearly 87% during Monday morning trading, with Evergrande’s market value falling to around $590 million by midday. It peaked at over $50 billion in 2017.
The bleeding continued for the remainder of the day, with Evergrande closing the session down 79.4%.
The company said in a statement on Friday that it had “fulfilled” its obligations, including the publication of its results, and “respected the recovery guidelines” established by the Stock Exchange.
The listing of the title had been interrupted in March 2022, because the company, in dire straits, had not then published its results for 2021.
The annual results for 2021 and 2022 were finally published last month, and it is for this reason that the stock exchange gave the green light to the resumption of trading.
Meetings with creditors
Evergrande on Monday postponed meetings on restructuring its offshore debt just hours before they were scheduled to be held with creditors. The delay of regarding a month will allow creditors to “consider, understand and evaluate” the plan, the company said in a stock filing.
Evergrande’s proposed plan offers creditors the choice of swapping their debt for new company-issued securities or shares of two subsidiaries, Evergrande Property Services Group and Evergrande New Energy Vehicle Group.
The meetings will be held between September 25 and 26, which the developer says is “in line” with the schedule expected by creditors.
Earlier this month, the company filed for bankruptcy protection in the United States, a move aimed at protecting its US assets during its restructuring.
The company has also pushed back liquidation petitions in Hong Kong courts, with a hearing in one case postponed until October.
Evergrande, whose descent into hell is emblematic of the real estate crisis in China, announced on Sunday that it had reduced its losses to first half, despite a worrying lack of liquidity.
Its net losses for the January-June period amounted to 33 billion yuan ($4.53 billion), according to a statement posted on the Hong Kong Stock Exchange’s website.
They were 66.4 billion yuan for the same period last year.
The group, however, saw its cash melt during the first half of 2023, since it fell from around two billion dollars to only 556 million – a small sum for a group of this size. A situation that should complicate its repayments in the coming months.
“Mitigate the risks”
L’abyssal indebtedness of the group préochas been cutting the markets for two years and regularly makes headlines in the Chinese and international press. Evergrande now estimates its total debt at 2,388.2 billion yuan (US$328 billion) — up from nearly $340 billion at the end of 2022.
The pause of the Evergrande construction sites had led to demonstrations in several provinces of China from future owners unhappy at not being able to move into the promised accommodation.
Many had also refused to pay their monthly installments, which had worsened the financial situation of the group.
As of June 30, 2023, the group’s borrowings amounted to 624.77 billion yuan (86 billion dollars), an increase of more than 12 billion yuan compared to the end of 2022. Again, this situation weakens the possibility for the group to repay its debt.
Ex-number one fallen in real estate in China, the group was once one of the most powerful in the country and, in addition to its core business, had invested in mineral water, a football club or even electric vehicles.
Going forward, the company will focus on “mitigating risk” and “working to ensure the delivery of real estate,” Evergrande promised in its statement on Sunday.
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