Caixin
Oct 28, 2021 05:15 AM
FINANCE

Hong Kong Luxury Villa Linked to Evergrande’s Hui Pledged for Loan

Hui Ka Yan
Hui Ka Yan

(Hong Kong) — An associate of Hui Ka Yan, chairman of troubled China Evergrande Group, recently put up a luxury house in Hong Kong for loan collateral as the billionaire and his property empire face an escalating debt crisis.

A property on Hong Kong Island’s Black’s Link trail, known for its wealthy communities and expansive views, was pledged Oct. 19 to the local branch of China Construction Bank, documents from the city’s Land Registry showed. Market observers estimate the property’s value at HK$700 million ($90 million).

A person close to the matter said the property was pledged under pressure from Evergrande’s creditors, which demanded additional security for the company’s private equity financing. Hong Kong-traded Evergrande is struggling to repay debts amounting more than $300 billion, some of which it has defaulted on.

The property is owned by billionaire Hui, who is expected to dispose of more personal assets gradually, said the person. A registration document showed that the property is owned by a company called Yuanxun Ltd. On July 30, Tan Haijun, an associate of Hui, became director of the company.

Also on July 30, Tan succeeded Hui as sole director of Giant Hill Ltd., a company that owns another luxury villa on Black’s Link trail. Hui owns the HK$800 million house as sole shareholder of Giant Hill, a situation not uncommon in Hong Kong where many wealthy people own property through companies.

The relationship between Hui and Tan is unclear. Local media HK01 reported that Tan is the butler in Hui’s house. The two houses are next to each other, and both are owned by Hui’s family, according to HK01.

Land registry records showed that Yuanxun and Giant Hill were both registered in Hong Kong in March 2006. The companies bought the two Black’s Link properties in August 2009 without disclosing financial details.

After the directorship transfer in Giant Hill, Hui remains the sole shareholder of the company. Industry experts said the personnel change is an attempt to make it easier for Hui to deal with the offshore asset as he lives on the Chinese mainland. It can give Hui more flexibility, as Tan now has the right to handle the company’s operations, such as pledging the property for loans or even selling it, a real estate agent specializing in luxury properties said.

Evergrande, China’s most indebted property developer, is embroiled in a deepening liquidity crisis that has sent jitters through China’s real estate industry and global bond markets. The company has been trying to offload assets to raise cash to repay creditors, suppliers and homeowners.

 Read more  
Cover Story: How Evergrande Could Turn Into ‘China’s Lehman Brothers’

But the attempts didn’t go smoothly. Last week, Evergrande abandoned talks to sell a stake in its property-management arm and said it hasn’t made further progress on asset sales. Evergrande’s real estate sales plunged about 97% during the peak home-buying season, further crimping its ability to generate funds.

Citing anonymous sources, Bloomberg reported that authorities in Beijing are urging Hui to tap his personal wealth to help address the company’s crisis.

Guo Yingzhe contributed to the story

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (hello@caixin.com)

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