China Evergrande has ‘no bullets’ left as crisis lights up mainland social media about end-game for fallen billionaire Hui Ka-yan
- Evergrande’s debt woes deepen by the day as it misses another bond repayments before a court petition in Hong Kong to wind up the group
- Brock Silvers at Kaiyuan Capital thinks there’s ‘plenty of time on the clock’ for founder Hui Ka-yan to salvage the restructuring plan
The debacle at China Evergrande Group is heating up some of the nation’s social media platforms with discussions about its fate. Some argued the penny stock is worth a punt before another bid to beat the drop. Others said bankruptcy may be inevitable.
The drama took another turn for the worse when the developer’s major onshore unit, Hengda Real Estate Group, failed to repay a 4 billion yuan (US$547 million) note on Monday, an obligation among US$327 billion of liabilities choking the homebuilder. It is talking to bondholders about a solution on a “non-evasion of debt” basis.
The unit is already being investigated by regulators for market breaches, a transgression that cripples Evergande’s ability to sell and list new bonds in offshore markets under China’s capital market rules. Several former executives have been detained over missing funds, local media outlet Caixin Global reported on Monday.
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China real estate woes: Evergrande files for bankruptcy protection in New York
“Not able to issue new notes means no more financing possibilities, just like no bullets to fight a war,” Zhou Si, a user with 810,000 followers on Weibo, said in a post on the short-message platform on Tuesday.
“If it fails to restructure its debt, the only ending for [founder] Hui Ka-yan is bankruptcy,” Xiaoma, another commenter, added.
Evergrande did not immediately reply to an email on Tuesday seeking comment. A call to its corporate headquarters in Shenzhen went unanswered.
Its shares fell 8.1 per cent to HK$0.395 on Tuesday, adding to a 22 per cent slump on Monday. The stock has crashed by more than HK$335 billion (US$42.8 billion) since hitting HK$25.80 in July of 2020, a month before Beijing unleashed its industry-crippling “three red lines” policy.