Chinese billionaire Hui Ka Yan has cut his stake in Evergrande by 9.1%, raising HK$2.7 billion ($343 million) as the deeply indebted property developer continues its scramble for cash.
Shares of the Hong Kong-listed company dropped as much as 8% on Monday, after plunging more than 10% on Friday. A filing made to the Hong Kong Stock Exchange that day shows Hui, 63, sold 1.2 billion Evergrande shares at HK$2.23 apiece on Thursday. The price marks a 20% discount to Evergrande’s closing price the day before.
Evergrande didn’t respond to an e-mailed request for comment. The filing didn’t disclose who bought the shares. The embattled billionaire now owns 67.9% of the company together with his wife Ding Yumei, down from 77%.
The share disposal – the first of its kind since Evergrande’s initial public offering in 2009 – comes as Hui has been pushed to use his personal wealth to alleviate the company’s cash crunch. He had already injected more than $1 billion in cash to improve the distressed developer’s liquidity and sustain its day-to-day operations, the state-affiliated news outlet Yicai recently reported. Hui raised the amount by pledging shares and disposing of assets such as private jets, and the proceeds are likely to have helped the company narrowly avoid default and pay bond interests right before deadline.
Still, it remains unclear how Evergrande plans to resolve its whopping amount of liabilities. The company is close to cratering under more than $300 billion in total debt, as it once borrowed from financial institutions as well as average employees to sustain its rapid expansion in China’s real estate sector. A government clampdown on financial leverage and housing prices has drastically reduced available funding for property developers, with investors dumping their stocks and bonds across the board.
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Speculation on Evergrande’s possible fate ranges from a prolonged debt restructuring to a breakup of the company, which has interests in businesses such as football, theme parks and mineral water.
Hui, on his part, said in October that he wanted Evergrande to shift from developing properties to making electric vehicles. The plan, however, has been met with widespread skepticism, and Evergrande’s Hong Kong-listed electric car unit, Evergrande New Energy Vehicle Group, has also warned publicly about its “serious shortage of funds.” The company said last week that it is still negotiating with potential buyers on possible disposal of assets and projects. It sold earlier this month in-wheel motor producer Protean Electric for an undisclosed amount.