Friday, December 2, 2022

Evergrande returns land for which it paid €763 million for free

Indebted Chinese real estate giant Evergrande returned to authorities in the central city of Wuhan, without compensation, a total of 1.5 million square meters of land for which it had paid 5.6 billion yuan (US$783 million, €763 million). in 2017.

As reported on Tuesday by the Hong Kong newspaper South China Morning Post, the 11 plots of the so-called ‘Evergrande Technology Tourism City’ had been classified as tourist and leisure areas, but the company did not carry out any work on them, so that the local authorities announced last Friday the decision to “recover the rights of use” without paying anything in return.

This is not the first time that Evergrande has faced a similar decision, as it has had to return parcels in Sichuan (central) or Hainan (south) provinces to the authorities for free.

In August, the conglomerate did receive 5.52 billion yuan (US$772 million, €752 million) for the land on which it was building a stadium for its soccer team in the southeastern city of Guangdong, although it had paid 6.813 million yuan. yuan (US$953 million, €928 million) for them.

Evergrande, which in the middle of last year accumulated liabilities of more than US$300 billion and defaulted on some of its bonds, is immersed in a campaign in which it seeks to get rid of its assets, raising as much money as possible while preparing a restructuring plan.

The company’s shares on the Hong Kong Stock Exchange have been frozen since mid-March after having lost almost 90% of their value since the beginning of 2021, and the operator of the parquet has already warned the company of the possibility of its expulsion if continues without disclosing its income statements, since the last of these publications corresponds to the first half of last year.

After failing to meet its financial obligations, Evergrande incurred in a situation of ‘cross-default’ (“cross insolvency”), in which the default with a single creditor is enough for others to claim the repayment of their loans.

One of its creditors, who was trying to recover some US$110 million, filed a liquidation petition against Evergrande in June with the Hong Kong Court, whose next hearing is scheduled for the next 28th.

The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers that, like Evergrande, had accumulated a high level of debt, supporting their growth for years with aggressive leverage policies. .

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