Hui Ka Yan, chairman of Evergrande Real Estate Group Ltd, the country’s second-largest real estate developer by revenue, attends a press conference on annual results in Hong Kong, China, 29 March 2016. Portal/Bobby Yip/File Photo Acquisition of LICENSE RIGHTS
HONG KONG, Sept 27 (Portal) – The chief executive of China Evergrande Group (3333.HK) has been placed under police surveillance, Bloomberg News reported on Wednesday, casting further doubt on the future of the embattled developer as it also faces rising prospects has to fight for liquidation.
Citing people with knowledge of the matter, the report said Hui Ka Yan, who founded Evergrande in the southern city of Guangzhou in 1996, was taken away by police earlier this month and is being monitored at a specific location.
It is not clear why Hui was placed under residential surveillance, Bloomberg News said, adding that the move was a type of police action that did not amount to a formal detention or arrest and did not mean Hui would be charged with a crime.
Portal could not immediately verify the report. Evergrande, the police department of Guangdong province, of which Guangzhou is the capital, and the public security ministry did not immediately respond to a Portal request for comment.
Evergrande is the world’s most indebted real estate developer and has been at the center of an unprecedented liquidity crisis in China’s real estate sector, which accounts for about a quarter of the world’s second-largest economy.
Evergrande, once China’s highest-grossing property developer, became public with its financial crisis in 2021. Since then, Evergrande and a number of its rivals have defaulted on their offshore debt obligations as home sales slow and there are fewer new opportunities to raise capital.
Hui’s alleged move, which is under scrutiny, comes at a time when his plan to restructure offshore debt, key to the company’s survival amid a crushing cash crunch, is likely to falter and the prospects of a liquidation gain momentum win.
Portal reported on Tuesday that a major offshore group of Evergrande’s creditors planned to join a bankruptcy lawsuit against the developer if it does not submit a new debt restructuring plan by the end of October.
This plan comes after the company rocked markets on Sunday when it announced it would not be able to issue new bonds as part of its debt restructuring plan due to a regulatory investigation into its main Chinese subsidiary, Hengda Real Estate.
Hengda said in a separate filing on Monday that the company had failed to pay the principal and interest on a 4 billion yuan ($547 million) bond due by Sept. 25.
Evergrande shares rose 1.3% in afternoon trading on the Hong Kong market on Wednesday, while an index tracking mainland developers listed in Hong Kong (.HSMPI) was little changed from the previous close.
PAYMENT WITH VOUCHER
The latest troubles for Evergrande come as investors are also focused on another major Chinese developer, Country Garden (2007.HK), which faces a new bond coupon repayment deadline on Wednesday.
The $40 million coupon, with a 30-day grace period, is tied to a $1 billion, 8% bond due in January, marking the latest payment challenge for Country Garden as the developer strives to avoid default.
The country’s largest private developer, whose financial woes have worsened the outlook for the real estate sector and led Beijing to unveil a series of support measures in recent weeks, successfully sought to avoid default this month.
Offshore creditors widely expect Country Garden to postpone Wednesday’s coupon payment while using the grace period to work out plans to restructure all of its offshore debt.
A spokesman for Country Garden did not immediately respond to a Portal request for comment.
“The decline in industry sizes in China’s real estate sector has been alarming to say the least,” said Fiona Kwok, Asian fixed income portfolio manager at First Sentier Investors.
“Unless Chinese regulators impose stimulus measures large enough to bring optimism to the real estate market and increase property sales, the risk of default among private and mixed owners will remain high.”
Reporting from Scott Murdoch in Sydney and Rae Wee in Singapore; Writing by Sumeet Chatterjee; Edited by Neil Fullick and Muralikumar Anantharaman
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