Evergrande Real Estate Group Ltd updates
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The wife of billionaire China Evergrande founder has paid millions of dollars for wealth management products issued by the real estate group, according to executives who have tried to soften small investors for fear of losing their investments.
Ding Yumei, the wife of Hui Ka Yan, Evergrande chairman and formerly the richest man in China, paid R20m ($ 3m) for the company’s high-yield investment products on July 8, according to a purchase document shown to investors by a senior executive officer this week.
Hundreds of shareholders have fallen in the group’s headquarters in Shenzhen to claim their money back on wealth management products, in a rare display of public outrage.
The protests have raised concerns about a deepening of the liquidity crisis among the most culpable developer in China, and the risk posed by the company’s dangerous situation wider real estate sector, which accounts for more than a quarter of the country’s economic activity.
An manager of Evergrande Wealth Management said the company has about 80,000 investors, half of whom have invested a combined R40 billion in various projects used to bridge the funding gap for the parent group.
However, investors were not impressed by Hui’s wife’s investment as proof of his commitment to the group, which indicates the fortune he earned from a company he founded in 1996 and in which he share of 71 percent retained.
“It’s a drop in the bucket for Hui’s wealth,” an investor at the company’s headquarters told the Financial Times. “Hui paid himself billions of dollars in dividends and now he’s trying to make his wife believe he’s on the same boat with us.
Hui has unveiled a plan that would require 10 percent of the initial money to be repaid by September and that the full repayment be repaid within 27 months. Managers of the group say it is trying to reduce any losses.
Several Evergrande employees said they were told the company was buying a bright future in May and June. But two Evergrande staff members who said they had invested more than R300m said their boss was threatening to arrest them if they left the business.
“We were kept in the dark until the very last moment,” said one. “Everyone is furious. We were abandoned by the firm. All we can do is encourage investors to protest and make this thing so big that the authorities need to step in. ”
Evergrande is also trying to persuade investors to accept properties at sharp discounts instead of cash refunds, including 28 percent discounts on apartments.
But several investors turned down the offer, requiring them to buy in their home provinces and subject to approval by local authorities, who are worried about the drop in property prices. Shareholders have also expressed doubts about the repayment plan, fearing the company could collapse soon.
“Evergrande is going down and there is a small chance that it will recover,” said a Shenzhen shareholder who bought an amount of Rmb1 million worth of wealth management products this month.
None of Evergrande’s $ 14 billion in foreign debt is payable this year, but the company is facing interest on dollar debt this month.
Evergrande’s subsidiary in the country on Thursday applied for a one-day suspension in trading its bonds on mainland China.
The developer announced this week that he has appointed restructuring advisers, focusing on the increasing risk of default on its $ 89 billion debt. Two executives from Evergrande Wealth have confirmed that government authorities have told banks not to expect interest payments next week.
The managers of Evergrande said the business has to fill too many financing gaps as it has to pay suppliers to complete projects and to repay investors.
Hui appeared in images posted on social media, in which senior executives guaranteed they would complete projects. At the end of June, the company worked on 778 developments in more than 200 cities in China.