Caixin
Nov 18, 2021 06:20 AM
BUSINESS

Evergrande Chief Borrows $105 Million Against Hong Kong Properties

Hui Ka Yan
Hui Ka Yan

China Evergrande Group Chairman Hui Ka Yan, known as Xu Jiayin in Mandarin, pledged two more luxury houses in Hong Kong as collateral to borrow $105 million to help pay the developer’s debts.

Evergrande, the world’s most indebted developer, has been struggling to sell assets as it grapples with more than $300 billion in liabilities. Chinese authorities have urged Hui to help repay the company’s obligations using his personal wealth. The billionaire has been selling off personal assets including art and calligraphy collections to raise funds, Reuters reported Tuesday, citing a person with knowledge of the matter.

The two adjacent properties on Hong Kong Island’s Black’s Link trail, known for its wealthy communities and expansive views, are owned by Giant Hill Ltd. and Good Bond Ltd. The owners pledged the houses Nov. 8 to ORIX Asia Ltd., a financial services firm, for a total of HK$821.34 millions ($105 million) in loans, registration documents showed.

The loans may have been related to interest payments on three offshore bonds due Nov. 10. A total of $148 million of interest was originally due Oct. 11. Evergrande missed the payment but had a 30-day grace period before it would be considered a default.

Evergrande is embroiled in a deepening liquidity crisis that has shaken China’s real estate industry and global bond markets. Since June, the company has been trying to offload assets to raise cash to repay creditors, suppliers and homeowners.

The company has so far managed to avoid defaulting on any publicly traded dollar bonds after paying interest before the end of grace periods. International clearing firm Clearstream said its customers received the overdue interest payments on three U.S. dollar bonds issued by Evergrande, Bloomberg reported last week.

But more interest payments are due on a number of Evergrande’s dollar bonds in the next two months, including $255 million of coupons due Dec. 28 for two bonds maturing in June 2023 and May 2024.

 Read more  
Caixin’s coverage about Evergrande’s debt crisis

The representative signing the paperwork for Giant Hill and Good Bond was Tan Haijun. On July 30, Tan succeeded Hui as director of Giant Hill. Tan is the butler in Hui’s houses. according to Hong Kong local media HK01, citing people familiar with the matter, a relationship that wasn’t confirmed by Caixin.

The house owned by Giant Hill has been used by Hui and his family as a private residence. Even though Hui no long acts as Giant Hill’s director, he is still the sole shareholder of the company, registration documents showed.

The relationship between Good Bond and Hui is unclear. According to the company’s annual registration disclosed March 31, its director is listed as Lin Yan, and its sole shareholder is Give Power Enterprises Ltd., a company registered in the British Virgin Islands.

A separate property owned by a company related to Hui and adjacent to the two villas on Black’s Link trail was pledged as loan collateral Oct. 19 to the local branch of China Construction Bank, documents from the city’s Land Registry showed. A person close to the matter said the property was put up under pressure from Evergrande’s creditors, which demanded additional security for the company’s private equity financing.

A registration document showed that this property is owned by Yuanxun Ltd. Tan became director of the company also July 30.

Giant Hill, Good Bond and Yuanxun were all registered in Hong Kong in March 2006 and purchased the three properties in August 2009. Transaction prices were not available. Market observers estimate the three villas’ combined value at HK$2.5 billion.

The property owned by Good Bond was leased by Goldman Sachs (Asia) Finance in 2011 for HK$530,000 a month, and later by Yusuf Alireza, CEO of local commodity trader Noble Group Holdings Ltd., in 2013 for HK$550,000 a month.

Han Wei contributed to this report.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (hello@caixin.com)

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