China Evergrande crisis: founder Hui Ka-yan vows to repay debt and ‘start new chapter on survival’
- Evergrande founder Hui Ka-yan has pledged to repay creditors and deliver projects this year in a letter to the company’s employees
- He says the company can fulfil its mission of repaying debt and ‘start a new chapter on survival’ if they work together
Hui Ka-yan, the founder of China Evergrande Group, has pledged to repay creditors and deliver projects this year in a letter to the company’s employees. The promise comes after the stricken developer once again missed a self-imposed year-end deadline on releasing its restructuring plan.
“2023 is a crucial year for Evergrande Group to fulfil its duty as an enterprise and deliver projects in every possible way,” Hui said in the new year message late on Sunday, which was seen by the Post.
“I believe we can complete our mission of delivery, repay various debts, eliminate the risks, and start a new chapter on survival, as long as all of us work together and never give up on resuming our construction, sales, as well as operations,” he added.
Many details, including the sales and delivery targets for this year, were not disclosed.
The developer, weighed under 1.97 trillion yuan (US$286 billion) of liabilities, had previously postponed releasing a similar preliminary restructuring plan as promised in July.
Evergrande is among some 40 industry peers struggling because of a liquidity crisis, after Beijing introduced the “three red lines” policy in 2021 to curb leverage in the real estate sector. The company has defaulted on US$22.7 billion of offshore debt, including loans and private bonds, since late 2021.
The company’s stock, which has been suspended from trading since last March, has lost 95 per cent of its value compared to its all-time high of HK$31.55 reached in October 2017.
However, Evergrande is trying to reach an agreement with its creditors on resolving its debt payments, according to a filing with the Hong Kong stock exchange in December.
The company had met a group of its US dollar bondholders early last month to formally discuss plans, Bloomberg reported. But the progress on the talks are unclear as no details have been disclosed as yet.
“The differences between the parties on the framework and key provision of the restructuring plan are narrowing,” Evergrande said in the filing.
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Hui’s letter said that Evergrande completed 732 projects and delivered 301,000 residential units in 2022, hitting its delivery target for the year.
While it did not provide revenues for the year, contracted sales in the first 11 months of 2022 stood at 29.12 billion yuan, a fraction of the 735 billion yuan achieved for the whole of 2020.
The company also commenced production and deliveries of its new-energy vehicle Hengchi 5 last year, while its tourism project on Ocean Flower Island in Danzhou, southern Hainan province, received 7.6 million tourists, the letter added.
