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The construction site of Guangzhou Evergrande Soccer Stadium, a new stadium for the Guangzhou FC developed by China Evergrande Group, on September 26, 2021. Photo: Reuters.
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Evergrande’s fire sale continues as founder Hui Ka-yan disposes of corporate and personal assets to avert defaulting on debt

  • Evergrande last week sold the Dutch electric motor maker e-Traction to Saietta Group at a 97 per cent discount to its 2019 purchase price
  • With more than US$300 billion in total liabilities, Evergrande has so far averted default three times, coming up with capital to pay its overdue coupons and interests
China Evergrande Group
Pearl Liu
Pearl Liu
Why you can trust SCMP

Hui Ka-yan, founder and chairman of China Evergrande Group, has stepped up the disposal of his corporate and personal assets to help the world’s most indebted developer stave off defaults as the company faces US$366 million of interest payments this year.

That included the Dutch electric motor maker e-Traction, sold last week to Saietta Group based in the UK last week for €2 million (US$2.3 million), a staggering 97 per cent discount on the March 2019 purchase price of 500 million yuan (US$78.4 million).

Evergrande, with more than US$300 billion in total liabilities, has so far averted default three times, as it came up with capital to pay its overdue coupons and interests. Still, it must convert more assets into cash, as its bank borrowings dried up after the developer breached the Chinese central bank’s tough limits on indebtedness.

The Shenzhen-based developer had gone on a debt-fuelled acquisition binge since 2017, expanding from its core real estate into bottled water, health care, financial products and the capital intensive business of assembling electric cars. The company even owns a professional football team.

Sources: SCMP Research, Company reports
Evergrande has spent billions of dollars buying automotive assets, including a US$930 million purchase in 2019 for the remnants of the bankrupt Saab Automobile to drive Hui’s dream in electric cars. Evergrande is now in talks with US and European venture capital firms to sell its stake in National Electric Vehicle Sweden AB (NEVS).
Earlier this month, Evergrande’s electric car unit was poised to sell Protean Electric – a UK start-up that makes in-wheel motors bought in 2019 for US$58 million – to the UK-based e-mobility firm Bedeo for an undisclosed price, according to a Bloomberg report.
Evergrande must raise US$366 million by the end of this year to settle outstanding interest payments on its onshore and offshore debt, some already overdue. The company also owes money to thousands of vendors, furnishing companies, designers and even real estate agents owed fees for helping it sell its apartments.
Sources: Evergrande, SCMP Research.

Another deadline looms in early December, when Evergrande must pay US$82.5 million in overdue interest payments on offshore debt it missed last week, while another US$29 million in coupon payment is due on December 5 on its onshore debt

Hui has injected more than 7 billion yuan in cash from the disposal of personal assets and share pledges to boost the firm’s liquidity, according to China Business News, citing unidentified people close to the matter.

Evergrande raised about HK$1.12 billion two weeks ago by further selling down its stake in internet company HengTen Networks Group as it faces a cascading series of interest payments on its offshore debt. Evergrande sold 530 million shares in a series of sales since November 4, reducing its stake in Hong Kong-based HengTen from 26.55 per cent to 20.82 per cent, according to regulatory filings with the Hong Kong stock exchange.

In the past two weeks, Hui mortgaged three of his luxury houses on The Peak in Hong Kong, the city’s most expensive address, according to reports in the Chinese media.

It is unclear how much Hui received, but each of the homes measuring 5,000 square feet (464 square metres), is valued at more than HK$800 million (US$102.7 million).

Meanwhile, the tycoon, ranked as Asia‘s wealthiest man in 2017 has raised US$50 million last month through selling two of his private jets, according to The Wall Street Journal.

This article appeared in the South China Morning Post print edition as: Evergrande boss sells assets to avert debt defaults
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