Evergrande loses $2 billion in value as trade resumes; Creditors vote extended

HONG KONG, Aug 28 (Reuters) – China’s Evergrande Group (3333.HK) lost $2.2 billion, or 79% of its market value, on Monday after it resumed trading in a crucial move for the world’s most heavily indebted real estate firm to restructure its assets. external debt.

Evergrande is at the heart of China’s real estate crisis, which has seen a series of debt defaults since late 2021, and its shares have been suspended for 17 months.

The developer, which is now working to obtain approvals from creditors and courts to implement the debt restructuring plan, said on Monday it would postpone those creditors’ meetings for a month to vote on the proposal to give more time to “maximize creditor participation”. and support informed decision making.

Plan meetings are now scheduled for Sept. 26, rather than Monday, but three people with direct knowledge of the matter said many creditors had already registered their votes by last Wednesday’s deadline for submitting forms.

Evergrande needs more than 75% of the holders of each debt class to approve the plan, which offers creditors a basket of options to swap debt for new bonds and equity-linked instruments backed by its shares and shares in Hong Kong. listed units.

Its Hong Kong-listed shares closed down 79% at HK$0.35 Monday. Its market capitalization shrank to 4.6 billion HK dollars (586.29 million US dollars) from 21.8 billion HK dollars (2.78 billion US dollars) since it last traded.

Ownership retreat

Evergrande’s valuation reached an all-time high of close to HK$420 billion in 2017.

The stock has been suspended since March 21, 2022, and trading resumed after the company said it had met all conditions by the Hong Kong Stock Exchange.

Its two units, China Evergrande New Energy Vehicle Group (0708.HK) and Evergrande Property Services Group (6666.HK), resumed trading last month after a 16-month hiatus.

Evergrande could have faced delisting if the suspension reached 18 months.

“Going forward will continue to be difficult for its operations and joint performance,” said Stephen Leung, director of Hong Kong-based UOB Kay Hian.

“There is little hope that Evergrande will be able to rely on home sales to pay off debt because home buyers prefer state-owned developers, and it will not be able to benefit from stimulus policies.”

The worsening debt crisis in the real estate sector has affected the recovery of the Chinese economy, which has increased pressure on policymakers to introduce stimulus measures. So far, the government has relaxed housing loan rules and subsidized affordable housing, which encouraged investors for a while.

The mainland Hang Seng Real Estate Index (.HSMPI) rose more than 6% in the early morning session, before closing 0.1% higher.

However, new home prices in China are likely to show no growth this year, according to a Reuters poll.

“We haven’t seen a tangible improvement in the fundamentals of the real estate market,” said Mark Dong, general manager of Hong Kong-based Minority Asset Management, which manages more than $1 billion in assets. Dong said the company reduced its stake in real estate stocks.

Evergrande’s resumption of trade also came after the developer on Sunday reported a smaller net loss for the first half of the year due to higher revenue.

Evergrande also reported a combined net loss of $81 billion for 2021 and 2022 in its long-awaited earnings report last month, against a profit of 8.1 billion yuan in 2020.

As with Evergrande’s previous two annual financial statements, auditor Prism Hong Kong and Shanghai did not issue a conclusion on this report, citing numerous uncertainties regarding the business as a going concern.

($1 = 7.2834 CNY)

($1 = 7.8447 Hong Kong dollars)

(This story has been rewritten to remove extraneous words in the title)

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