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Highlights
- Evergrande suspended the trading of its shares on the Hong Kong stock exchange on Monday.
- The property developer on Monday said it had been ordered to demolish 39 under-construction properties.
- On Friday, shares of Evergrande ended at HK$1.59. In the last one year, its shares fell 89%, eroding investors’ wealth massively.
Chinese real estate giant Evergrande suspended the trading of its shares on the Hong Kong stock exchange on Monday (January 3). In a release to the Hong Kong stock exchange, the debt-laden company said the trading suspension was pending the release of "inside information", without elaborating further.
The property developer on Monday said it had been ordered to demolish 39 properties under construction in Hainan.
The indebted developer said authorities at Danzhou city in Hainan province on December 30 ordered it to demolish 39 under-construction buildings at the Ocean Flower Island project. However, the company did not share the reason behind the demolition order.
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According to local media reports, the demolition order was issued because of illegal construction and environmental violations and it revealed the demolition should be done within 10 business days.
Image Source: © Danno333 | Megapixl.com
In a WeChat post on Monday, Evergrande said it had been rectifying environmental issues since 2017.
The company told homeowners of the Ocean Flower Island project that it had spent US$ 13 billion over the past six years to build over 60,000 homes, and the demolition order is unlikely to affect the rest of the development.
ALSO READ: China’s Evergrande hits 11-year low failing to repay creditors
According to analysts, the demolition order in Hainan will further put down homebuyers’ confidence in the company.
It may be noted that the Ocean Flower Island project is one of Evergrande’s flagship resort development projects, comprising hotels, convention centres and theme parks.
The cash-strapped real estate developer is struggling to repay debts worth more than US$300 billion, including US$20 billion of offshore bonds, on which it defaulted last month.
The company, which was once China's top-selling developer, is now struggling to raise cash from asset and share sale to repay creditors and suppliers.
Evergrande shares suspended from trading in Hong Kong
Evergrande sets up risk management committee
The property developer has set up a risk management committee as the list of its unpaid creditors and suppliers continue to grow. The committee comprises members from state companies and will actively engage with its creditors, the company had said earlier.
In another development, the company on Friday pushed back its plans to repay investors in its wealth management products, saying each investor could expect to receive 8,000 yuan or US$1,257 per month in principal payment for three months irrespective of its maturity date.
Earlier, the company had agreed to repay 10% of the investment amount, without mentioning any amount, by the end of the month when the product matures.
ALSO READ: Is China’s Evergrande crisis a threat to Australian miners?
Last week, Evergrande said construction activity had resumed on 91.7% of its national projects, which was halted following the developer’s default on payment to suppliers and contractors.
On Friday, shares of Evergrande ended at HK$1.59. In the last one year, its shares fell 89%.
