Evergrande has become the most visible face of the deep liquidity crisis that has hit China's real estate sector in recent years, an industry that accounts for a quarter of the world's second-largest economy. The company was the market leader until, starting in 2021, its serious financial problems came to light: a large debt that grew like a snowball until it led to the liquidation of the company, ordered this Monday by the Hong Kong court after turbulent months.
These are the key dates of this collapse.
August 2021, warning from the authorities
The construction of numerous Evergrande projects across China is being halted due to debts coming due. Faced with this situation, the central bank and financial authorities are calling the group's leaders together and asking them to reduce debt risks and prioritize stability.
September 2021, default and stock market crash
The clearest signs of financial problems for the world's most indebted real estate company are emerging. With a debt of $305,000 million (more than 281,000 million euros), Evergrande is not paying the interest on two bonds raised abroad worth $131 million (120 million euros), which have a 30-day payment deadline. The company's shares are in free fall on the Hong Kong Stock Exchange, where it is listed. The real estate company warns of the risks of cross-default (where non-payment of certain bonds triggers defaults in other financial instruments) due to the collapse in property sales.
October 2021, avoid bankruptcy
Evergrande suspended trading of its shares in Hong Kong on October 4th and resumed trading on the 21st, albeit with a 10% loss in value. The company, which had to repay $721 million in dollar-denominated bonds and $436 million in yuan-denominated government bonds between October and December, is avoiding bankruptcy after making those payments at the last moment.
November 2021, Xu Jiayin reduces his stake
Xu Jiayin, the company's founder in 1996 and its president, reduced his stake from 77% to 67.9% after selling 1.2 billion shares.
December 2021, insolvent
The Chinese brick giant is once again experiencing liquidity problems and is failing to meet its obligations. The rating agency Fitch declared it insolvent after it officially failed to meet the repayment in dollars of around 76 million euros previously agreed with its lenders. Its shares fall to their lowest level since the conglomerate debuted on this market in 2009. The company says it will negotiate a restructuring plan with its creditors abroad.
March 2022, collection of the deposit
Evergrande is suspending trading of its shares again, citing its inability to provide audited results. In addition, an investigation is being launched into real estate management, with banks confiscating 13.4 billion yuan (1.722 million euros) in deposits.
January 2023, resignation of the auditor
PriceWaterhouseCoopers says it will not continue its audit of the indebted real estate company because it did not receive sufficient information on some key matters to evaluate the company's 2021 financial statements.
March 2023, restructuring
Evergrande is presenting a plan to restructure part of its offshore debt, proposing to holders of this type of bonds new debt instruments of the same value and “equity-linked instruments” that can be converted into shares in its property management subsidiaries. or electric vehicles, both listed in Hong Kong.
July 2023, losses
Evergrande reports huge net losses: in 2021 they amounted to 476,035 million yuan (61,135 million euros) and in 2022 they amounted to 105,914 million yuan. In 2020, the group made a profit of 8.076 billion yuan.
August 2023, bankruptcy in the USA
Evergrande is using the US payment suspension law to prevent the seizure of its assets. This law allows foreign companies in the process of restructuring to suspend the payment of their international debts in the North American country. The conglomerate reported losses of 33,012 million yuan (4,239 million euros) in the first half of the year, down 50.4% from the same period last year. The company's shares are trading again in Hong Kong after a five-month suspension. However, they do so with losses of 79%. Evergrande had already lost more than 90% of its market value when it stopped trading its shares in March.
September 2023, arrests
Shenzhen police arrest several employees of Evergrande's financial subsidiary, Evergrande Financial Wealth Management. Shortly thereafter, the conglomerate postponed its debt restructuring meetings, saying the terms of the proposal needed to be reassessed. On September 25, Evergrande announces that it cannot meet requirements for issuing new debt securities as its subsidiary Hengda Real Estate Group is under investigation by the China Securities Regulatory Commission for allegedly illegally disclosing information.
On September 28, trading on the Hong Kong Stock Exchange was suspended again following news that Evergrande's CEO and president was under investigation. Since then, Xu has been under “residential surveillance.”
December 2023, objection from creditors
The Hong Kong court approves the seventh extension for Evergrande to complete the finalization of its restructuring plan. It is later revealed that bondholders strongly reject the company's amended terms.
January 2024, liquidation
Evergrande's electric vehicle subsidiary announced on January 8 that its vice president Liu Yongzhuo had been arrested and was under police investigation. The group's creditors join the founder's claim for liquidation.
After more than a year and a half of unsuccessful attempts to restructure its offshore debt, a Hong Kong court ordered the company to be liquidated on January 29.
Follow all information Business And Business on Facebook and Xor in our weekly newsletter
The five-day agenda
The most important business quotes of the day, with the keys and context to understand their significance.
RECEIVE IT IN YOUR EMAIL
Subscribe to continue reading
Read without limits
_