Shares in crisis-hit Chinese property developer Evergrande rose on Tuesday after they resumed trading in Hong Kong. The heavily-indebted firm had suspended its shares on Monday pending the release of “inside information”.
Evergrande’s shares shot up as much as 10% before trimming gains to close 1.3% higher. The company said its sales for 2021 dipped 39% from the year before to $69.5bn (£51.6bn). Evergrande also assured that it had been ordered to demolish 39 buildings on the island of Hainan.
The firm said the buildings affected by the demolition order are at its Ocean Flower Island project and said the decision does not involve other fields of land in the project. “The company will diligently talk with the authority in accordance with the guidance of the decision letter and resolve the issue fittingly,” Evergrande said in a filing to the Hong Kong Stock Exchange.
The announcement also looked over at issues about the firm’s financial position: “With regard to the company’s current liquidity situation, the company will continue to sincerely maintain communication with creditors, seek to resolve risks, and preserve the legitimate rights and interests of all parties.”
Evergrande has more than $300bn of debt and is scrambling to raise cash by selling its assets and shares to repay suppliers and creditors. Last week, the company failed to make some interest payments on its offshore bonds.
Its $19bn in international bonds was believed to be in default by rating agencies after it missed a payment deadline last month. The company has also set back plans to repay investors in its wealth management products.
Evergrande’s shares have dropped almost 90% of their value in the last year as investors fret that it may be close to washing out under the weight of its debts.
MORE ON EVERGRANDE GROUP
The China Evergrande Group is the 2nd largest property developer in China with regard to sales. It is ranked 122nd on the Fortune Global 500. It is established in the Cayman Islands, a British Overseas Territory, and headquartered in the Houhai Financial Center in Nanshan District, Shenzhen, Guangdong Province, China It was founded in 1996 by Xu Jiayin. It sells apartments most likely to upper- and middle-income dwellers. In 2018, it became the most valuable real estate company in the whole world.
In 2021, payments due on its debt, estimated in the hundreds of billions of dollars, resulted in the Evergrande liquidity crisis. This was one of the major reasons for the massive drop in many stock market indices on September 20, 2021. The Chinese government is reportedly working to restructure Evergrande to resolve the crisis.