Trading in Evergrande Group shares was suspended in Hong Kong on Monday, days after Chinese media reported that the debt real estate developer would be forced to demolish a residential development in the southern province of Hainan.
The company, which is the center of a sector-wide crisis months in the country, announced in a filing to the Hong Kong Stock Exchange that the halt “pending the release. . . of an announcement containing inside information ”. The company did not add further details.
Evergrande has missed a series of mortgage payments since September, but previously transferred the money owed before the 30-day grace periods ended. It was formally declared as default on his debt in December by the rating agency Fitch after failing to transfer funds due at the end of one such grace period.
The company, which embodied the huge debt of China’s real estate sector, has more than $ 300 billion in liabilities and is in the early stages of a protracted and politically sensitive restructuring process. Both the government and investors have focused on its ability to sustain its hundreds of projects.
Evergrande said in a social media post on December 26 that work had resumed on 92 percent of its projects, compared to about half in September, when its crisis sent shock waves across world markets.
Hui Ka Yan, its billionaire chairman, said in the same post that the company was in “extremely difficult circumstances” and the aim was to deliver properties to owners. Many real estate developers in China, including Evergrande, sell apartments to buyers before they are completed.
Cailian, a Chinese media inlet, reported over the weekend that Evergrande was ordered to demolish 39 buildings within 10 days because his planning permit was obtained illegally and revoked. The article refers to a document allegedly made by local authorities in Danzhou, a city in the northwest of the island province.
Trading in Evergrande’s shares, which 89 percent lost their value last year, was also discontinued in October. The Hang Seng mainland real estate index fell 3 percent in Monday trading.
Evergrande has struggled with interest payments on its international bonds, which at $ 19 billion exceed those of any other developer. But over the coming weeks, it deadlines on major payments.
In December, it launched a new risk committee consisting mainly of representatives of state-owned enterprises.
Chinese real estate developers were generally subject to record numbers of downgrades last year by international rating agencies. Citi analysts noted that, for listed developers, overall contracted sales fell by 1 percent in 2020 in their first-ever decline, while Evergrande’s sales fell by 39 percent.