2023-10-02 00:44:32
Evergrande confirmed on Thursday that Hui Ka Yan is subject to “mandatory measures” for suspected crimes.
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The company did not reveal where Xu, 64, is or what crimes are attributed to him.
A housing complex by Chinese property developer Evergrande is seen in Wuhan, central China’s Hubei province, on September 28, 2023. (AFP Photo)
/ STR
Meanwhile, CNN explained that according to the Chinese legal system, “mandatory” measures can include house arrest and formal arrest.
One day before, Wednesday, Bloomberg exclusively reported that Hui Ka Yan was under “residential surveillance.”
Xu founded Evergrande in 1996. His house arrest adds to uncertainty regarding the future of the real estate giant, which hopes to successfully complete a massive debt restructuring plan overseen by China’s government in the coming weeks to avoid collapse.
Evergrande’s large debt was estimated at the end of June at $328 billion. Their situation has contributed to the worsening of the real estate crisis in China, generating fears of contagion on a global level.
At the end of 2022 Evergrande had
more than 100,000 employees and almost 800 unfinished real estate projects. Some 700,000 apartments were planned to be built in more than 200 cities in China.
These are the keys to billionaire Hui Ka Yan and the Evergrande crisis:
This photo taken on June 5, 2017 shows Evergrande Chairman Hui Ka Yan attending a meeting in Wuhan, central China’s Hubei Province. (Photo: AFP).
/ STR
Who is Hui Ka Yan?
Hui Ka Yan, also known as Xu Jiayin, was born in a village in Henan Province on October 9, 1958.
He was the son of a woodcutter. He lost his mother when he was eight months old and was raised by his father and his grandmother, who sold homemade vinegar.
In 1982 he graduated from Wuhan University of Science and Technology with a degree in Arts and Science.
He worked as a technician in a steel factory for a decade, until in 1996 he founded the Evergrande company in the city of Canton. The company was dedicated to the massive construction of homes.
In accordance with BBC MundoIn a speech in 2017, Hui said that during his childhood he ate mainly sweet potatoes and bread.
“At that time, my greatest wish was to leave the countryside, find a job and be able to eat better,” he said.
In that same 2017, Hui became the richest person in China, with a fortune of an estimated $42.5 billion, according to Forbes magazine.
But then came the decline and year following year Hui fell among the richest in China. So much so that in 2021 it was in 44th place on the list, and the following year it no longer appeared.
As the EFE agency recalls, in his peak years Hui became the first millionaire in China to embrace philanthropic work, with an unprecedented donation of $68 million in 2013. He also flaunted his wealth.
As for his political connections, Hui was a member of the Chinese Communist Party for more than 30 years. He became part of the Chinese People’s Consultative Conference, an elite group made up of government officials and the most important representatives of the business world.
“Everything regarding Evergrande is given by the Party, the State and society,” he added.
Hui is married and has two children.
A man walks past a housing complex by Chinese real estate developer Evergrande in Beijing on December 8, 2021. (Photo by Noel Celis/AFP).
/ NOEL CELIS
The alarms are ringing in 2021
Evergrande was founded in 1996 by Hui Ka Yan, who until then was a steel factory employee.
Between 2009 and 2010, the company also ventured into the dairy, cereal and oil business. In addition, it is trying to produce electric cars, thus starting a spiral of heavy debt.
In 2017, Hui becomes the richest man in China and all of Asia with a fortune valued at $42.5 billion.
A year later, China’s central bank includes Evergrande on its list of highly indebted companies to watch, warning that a potential collapse might carry systemic risks.
In August 2020, Chinese regulators announce new limitations for three debt ratios, the “three red lines,” with the purpose of reducing leverage in the real estate sector. The aim was to limit access to financing to those promoters that accumulated excessive liabilities, exceeded certain levels of leverage or did not have sufficient liquidity to meet short-term debts, as was the case of Evergrande.
That same month, Evergrande sells 28% of its property management unit for $3 billion and begins to dispose of properties at significant discounts.
In 2021 all the alarms go off, when Evergrande stops paying its extraterritorial (‘offshore’) debt at a time when it had a liability of more than $300 billion, giving rise to hundreds of lawsuits and a situation of great uncertainty. in the sector due to the implications of a possible bankruptcy, explains the EFE agency.
The Spanish agency details that like many other Chinese developers, since the real estate boom of the late 1990s, Evergrande depended largely on high levels of leverage (using debt to finance operations) and off-plan sales to continue carrying out its operations. promotions: some analysts estimated that the firm had 1.4 million homes sold before construction when the crisis broke out, equivalent to more than 200 billion dollars.
Then, Evergrande became a symbol of the deep real estate crisis that threatens the Chinese economy.
This aerial photo taken on Dec. 3, 2022 shows a housing complex by Chinese property developer Evergrande in Huaian, east China’s Jiangsu Province. (AFP photo).
/ STR
The measures that do not work and the restructuring plan
Analysts maintain that the weight of the real estate sector plus indirect factors is 30% of the country’s GDP. At this moment the sector is slowing down, something that worries both developers and Chinese citizens who take refuge in housing to give strength to their investments.
According to official figures published by EFE, commercial sales measured by land area decreased by 5.3% in the first half of the year following collapsing by 24.3% in 2022.
To stay afloat, Evergrande presented a proposal in March to restructure almost $20 billion of unpaid offshore debt, but it has repeatedly postponed the votes in which its creditors will decide on the matter, citing worse sales performance than what was expected and the consequent need for a “reevaluation” of the plan, indicated EFE.
Evergrande’s expectation was to have the support of its creditors before October 1 and finish the process by mid-December, but for the moment it has only achieved a little more than 30% of the votes for an important segment of debt (“class C”) valued at regarding 13,000 million dollars, although it already has the green light for two other types, EFE continued.
Losses and more losses
A few days ago, Evergrande disclosed losses of more than $85 billion since 2021. It also reactivated the listing of its shares in Hong Kong, following a year and a half of being suspended, but they have fallen 8.6% in the last month.
At its best, in 2027, Evergrande shares cost $31.55, today they are at $0.35.
The Evergrande crisis. (AFP).
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