JUST LIKE CAPITALI$M
Evergrande’s Hui Forced to Trim Stake in Defaulted Developer

Bloomberg News
Fri., December 10, 2021


(Bloomberg) -- Hui Ka Yan was once China’s second-richest person, worth $42 billion at his peak in 2017.

Now, the China Evergrande Group founder and chairman is scrambling to keep his embattled property developer afloat, including by tapping his own fortune. That took a blow this week, after he was forced to sell pledged shares in his company.

Hui sold 277.8 million shares reducing his stake to 59.78% from 61.88%, filings to the Hong Kong stock exchange showed Friday. No transaction value was given, but the shares were worth HK$498 million ($64 million), based on the average price when they were sold this week, according to Bloomberg calculations.

Hui, who’s now worth $6.3 billion, according to the Bloomberg Billionaires Index, has been pledging stock to raise funds as his property group teeters under the weight of liabilities exceeding $300 billion. He was summoned by the Guangdong government last week, which sent a working group to urge the company to manage risks. Fitch Ratings, meanwhile, cut Evergrande to restricted default on Thursday when it failed to make two coupon payments on time.

The forced sale started on Monday, the first business day after the troubled firm said it planned to work with creditors on a restructuring plan for its offshore debt. It continued for four trading days through Thursday, according to the exchange filings.

“Steps have been taken to enforce a security interest in the shares, or rights to such shares held as security against” Hui, the filings said. They didn’t identify the buyers and it’s unclear whether the sales were part of 500 million shares Hui pledged in October.

Hui sold 1.2 billion shares in late November, his first divestment since Evergrande went public in 2009, while Evergrande has raised money by mortgaging assets and seeking to sell private jets.

“Hui Ka Yan clearly will face more pressure to sell assets,” said Lan Deng, associate professor of urban and regional planning at the University of Michigan. “But the Chinese government also needs to make sure such sales will not impose significant downward pressure on asset prices because so much of the Chinese economy depends on a strong real estate market and rising land and housing values.”