Evergrande’s founder repeats pledge to complete homes for buyers as he rallies staff to step up to turn around world’s most indebted developer

Hui wants to deliver 39,000 homes this month, compared to less than 10,000 units each month between September and November
Billionaire says employees will be required to not ‘lie flat’ and pledge to a quickened pace of home construction and sales

China Evergrande Group

Daniel Renin Shanghai

Published: 12:48pm, 27 Dec 2021

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Hui Ka-yan, the founder and chairman of heavily-indebted developer China Evergrande Group, is trying to rally his employees and deliver more homes as the year comes to a close.

At a weekly meeting with company executives on Sunday, the 63-year-old billionaire said all employees will be required to not “lie flat” – a buzzword in China that means giving up or doing nothing – and pledge to a quickened pace of home construction and sales, so that the developer could repay all its debt.

“As long as we do our utmost, at any cost, to resume construction at our projects, we will be able to deliver homes to buyers,” he said, according to a statement by the company on its WeChat social media account. “We will also be able to resume sales and normal operations of the company and, eventually, repay all debt.”

Shenzhen-based China Evergrande is the world’s most indebted developer, with US$300 billion in liabilities. It has been under fire since September, when it defaulted on a wealth management product and missed a coupon payment for an offshore bond.

Since then, the developer has made several attempts to avoid defaults through last-minute payments. The crisis at China Evergrande has also triggered mounting concerns about China’s property sector, which has high gearing, and the growth outlook for the world’s second-largest economy.

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Hui said that China Evergrande aimed to deliver 39,000 homes from 115 developments across the country in December, compared to less than 10,000 units each month between September and November.

Work has resumed at about 92 per cent of the developer’s projects, 40 percentage points higher than September, with 89,000 workers involved in the construction work, according to its statement.

China Evergrande had land reserves covering 778 projects in 233 cities across China as of June 30, according to its latest interim report. Some projects had been suspended because of its failure to pay suppliers and contractors, a crisis that shook the industry and investors in Chinese offshore property stocks and bonds.

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“It is still too early to conclude that a high rate of work resumption could be enough to help the group overcome its capital crunch,” said Yin Ran, a Shanghai-based angel and property investor. “Total debts of about 2 trillion yuan [US$314 billion] is a big sum and not easy to deal with at a time when the government is taking a harsh stance on developers’ excessive leverage.”

Beijing has been scrutinising the assets of China Evergrande and Hui, but a fire sale of their assets was not expected as of now, Reuters reported early this month, citing unidentified sources.

Hui was, however, forced to sell 277.8 million shares in the debt-ridden developer to fulfil an obligation between December 6 and 9, according to an exchange filing. His holding in China Evergrande has dropped to 59.78 per cent from 61.88 per cent following the share sale, which was undertaken to enforce a “security interest”, according to a filing with the Hong Kong stock exchange.

Typically, shares pledged to a creditor as a “security interest” or collateral can be sold in case a loan goes bad.