Evergrande shares plummet on the stock market after announcing that it cannot issue new promissory notes

MADRID, 25 Sep.

Evergrande shares plummet on the stock market after announcing that it cannot issue new promissory notes


The shares of the Chinese real estate giant Evergrande fell more than 20% on the stock market at 8:30 a.m. this Monday, to 0.44 Hong Kong dollars (0.052 euros), after announcing that the group "cannot meet the requirements" for the issuance of new notes because one of its main subsidiaries, Hengda Real Estate, is under investigation.

The shares of the Asian company have fallen by 24% in this Monday's session, dragging down other real estate companies, such as Country Garden (-8.6%) and Hang Seng itself, the main indicator of the Hong Kong Stock Exchange , which lost 1.6%.

Evergrande has recommended holders of the company's securities and potential investors of the company to act "with caution" when trading in the company's shares.

The real estate company admitted a couple of days ago that the group's sales "have not been as expected" and that, after consulting with its advisors and creditors, it will reassess the terms of the foreign debt restructuring announced last March to adjust them to the "objective" situation of the company and the demand of creditors.

Under these circumstances, Evergrande announced that it would not hold the meetings it had called for this Monday and Tuesday in relation to the restructuring of its debt.

Last March, the Chinese promoter reported a restructuring plan for its offshore debt, which then amounted to approximately 140,284 million yuan (17,702 million euros), which would allow the debt to be exchanged for new company promissory notes with different maturities, among other measures.

"The proposed restructuring will alleviate the company's foreign debt pressure and facilitate efforts to resume operations and resolve issues in the country," Evergrande said at the time.

Now, the Chinese company has admitted that the investigation into its subsidiary Hengda Real Estate prevents it from meeting the requirements to issue new promissory notes.

Evergrande's problems have been accumulating in the last two years. Recently, the Chinese Police arrested several executives of its subsidiary Evergrande Financial Wealth, 100% owned by the group.

Evergrande was already under the spotlight in 2021 after it was learned that at least half a dozen employees redeemed wealth management products before the scheduled dates, although they were later reprimanded and forced to return the funds.

On August 18, the company filed for Chapter 15 protection of the United States Bankruptcy Law with the aim of protecting the company's assets in the United States, while the company's restructuring agreements are managed in Hong Kong and the Cayman Islands.

Evergrande was suspended from trading for 17 months and returned to the stock market on August 28, after publishing its overdue accounts for the years 2021 and 2022, in which the company recorded losses for an aggregate amount of 581,211 million yuan (73,369 million euros). to the current change).

The Chinese real estate giant, plagued by difficulties in meeting a liability estimated at around $300,000 million (275,665 million euros), failed to meet the self-imposed deadline to announce its restructuring plan at the end of 2022.