The property management subsidiary of indebted Chinese real estate giant Evergrande, Evergrande Property Services, is experiencing a black day as it returns to financial markets. The firm has experienced a 47% collapse on its first day of listing after more than a year suspended from the Hong Kong Stock Exchange. Specifically, the titles have fallen to 0.15 dollars at the close of the Asian parquet, which leads him to lose more than 1,500 million dollars in just one session.
It should be remembered that this subsidiary has left more than 87% capitalization between its peak, registered in February 2021, and the freezing of its price just over a year later, in March 2022, after the liquidity crisis broke out within the group. Before going public again, Evergrande Property Services was required to conduct an investigation into the misappropriation of some $1.87 billion and demonstrate a “sufficient” level of operations and assets to support its business.
Evergrande’s real estate subsidiary is not the only management that has reactivated the trading of its shares in recent days, since last Friday the subsidiary dedicated to the production of electric vehicles, Evergrande NEV, did the same, and currently its titles they are worth 52% less than when they were blocked, in April of last year. However, the shares of the parent company of both firms, frozen on March 21, 2022, have still not reactivated their listing.
Investors are awaiting the meeting that will take place on August 23 and 24 of the company’s creditors to vote on the proposed restructuring plan for its almost 20,000 million dollars (about 18,000 million euros) of ‘offshore’ debt. A Hong Kong court authorized the company a week ago to hold this consultation, after which, if it obtains the approval of the creditors, it must return to the courts at the beginning of September to obtain the necessary permits to go ahead with the plan, reports the local newspaper ‘South China Morning Post’.
Evergrande, which defaulted on its bonds at the end of 2021, also has similar open proceedings before the Courts of the British Virgin Islands and the Cayman Islands, where hearings on the matter are also being held this week In Hong Kong, Evergrande’s defense He assured that the latest estimates pointed to an asset recovery rate of 22.5% in the event of liquidation, a figure much higher than the 3.4% announced last November.
With this plan, Evergrande is proposing several options to holders of supported bonds, such as new debt securities of identical value and maturities of between 10 and 12 years or a possible combination of “equity-linked instruments” convertible into shares of its management subsidiaries. real estate or electric vehicles and new bonds, in this case between 5 and 9 years. For their part, holders of unbacked bonds will receive, under the plan, several tranches of bonds with maturities of up to eight years for a total amount of about $7.3 billion.
The approval of the proposal could be crucial for Evergrande to reactivate the listing of its shares in Hong Kong, frozen since March last year after having lost almost 90% of its value since the beginning of 2021 despite the fact that the parquet may expel those companies that cannot trade their shares for 18 consecutive months. On July 17, Evergrande finally published its income statements for the 2021 and 2022 financial years, which revealed combined losses of 581,949 million yuan (81,314 million dollars, 73,396 million euros) and a total liability equivalent to almost 340,000 million dollars.
The financial position of many Chinese real estate companies worsened after, in August 2020, their growth in aggressive leverage policies. In recent months, given the crisis in the sector, the Government has changed its tone and has announced various support measures, with state banks opening multimillion-dollar lines of credit to various developers.
