Evergrande Delistet because of debt crisis in China's real estate market

Evergrande Delistet because of debt crisis in China's real estate market

The strongly indebted real estate developer China Evergrand, who is already in Liquidation procedure announced on Tuesday that it was announced on Tuesday he will be canceled by the Hong Kong Stock Exchange on August 25th. This represents a further setback for the real estate sector in mainland china.

background of China Evergrande

evergrand was the most indebted real estate developer worldwide with over $ 300 billion, which was due to banks and bond loan when the court issued a liquidation order in January 2024. The court found that the company had not submitted a sustainable renovation plan for its debts, which fueled fears about the increasing debt burden of China. The trade in its shares has been suspended since the judgment.

deadlines and liquidation

The rules of the city determine that the listing of companies can be canceled if the trade in its securities was suspended for 18 months. China Evergrand Group received a letter from the stock exchange on August 8, which the company informed about the decision to delete its stock listing, since the trade had not been resumed by July 28. The last trade day will be August 22nd, and Evergranden will not apply for reviewing the decision, according to the official communication of the company.

consequences for shareholders and investors

"All shareholders, investors and potential investors of the company should note that the stock certificates remain valid after the last list of lists, but the shares will not be listed on the stock exchange and will not be tradable," it said in the explanation.

crisis in the Chinese real estate sector

evergrands belongs to numerous developers who, based on the measures of Chinese regulatory authorities, gave payment difficulties against excessive debt in the real estate industry in 2020. Unable to maintain financing, their obligations towards creditors and customers became unsustainable. These measures also led to the real estate industry plunged into a crisis that burdened the second largest economy in the world and shook the financial systems in and outside of China. Also after introduction Supporting measures Real estate prices in China further.

development and outlook

The Hong Kong court system deals with liquidation applications against several Chinese real estate developers, including Country Garden, one of the largest companies in the industry that is expected in January for a new hearing. China South City Holdings, a smaller real estate developer, was also asked for liquidation on Monday.

evergrande was founded in the mid -1990s by Hui Ka Yan, also known as XU Jiayin, and, according to the judgment of 2024, had over 90 % of his assets on the Chinese mainland. The company was listed in 2009 in Hong Kong as a "Evergrand Real Estate Group" and resigned with its shares on January 29, 2024 at $ 0.16 Hong Kong ($ 0.02).

Financial situation and risks

The liquidators reported in a progress report that by July 31, claims of $ 45 billion were received, which is significantly higher than the approximately $ 27.5 billion in liabilities that were disclosed in December 2022. However, the new amount is temporarily. The liquidators stated that they had taken control of more than 100 companies within the group, whose assets were estimated at $ 3.5 billion on January 29, 2024.

future steps

about $ 255 million of assets were sold; The liquidators described these realizations as "moderate". Of this amount, $ 244 million from assets from subsidiaries, although not all will be available, will be available in view of the complex ownership of the assets. "However, the liquidators believe that comprehensive restructuring will not be feasible will continue to pursue all credible possibilities that are available," said the explanations.

Hui, the founder of Evergrande, was arrested in China to have committed what the company's problems further tightened.

In 2024 the China Securities Regulatory Commission A fine of 4.2 Billions of Yuan (about $ 584 million) against the subsidiary of the company, Hengda Real Estate Group Company, because of various violations, including the forgery of financial documents. Hui was occupied with 47 million Yuan ($ 6.5 million) and excluded from the Chinese securities markets for life. Other managers were also punished.

In September 2024, the auditors of PWC were excluded by the Chinese authorities (56.4 million US dollars) punished for his participation in the examination of the failed real estate developer.