On the evening of September 28, China Evergrande Group issued an inside information announcement saying that China Evergrande had received a notice from the relevant departments that Mr. Xu Jiayin, executive director and chairman of the board of directors of the company, had been taken compulsory measures in accordance with the law for suspected violations and crimes.
China Evergrande stated that trading in the company's shares will cease on the Stock Exchange from 9am on 28 September 2023 and will continue to suspend trading until further notice.
As of the afternoon close of September 27, China Evergrande reported HK$0.32 / share, down 18.99%, with a total market value of HK $4.225 billion; Evergrande Auto reported HK $0.56 / share, down 20%, with a total market value of HK $6.073 billion; Evergrande Property reported HK $0.59 / share, down 14.49%, with a total market value of HK $6.378 billion.
丨Evergrande executives were taken away one after another for investigation
According to the first financial report, the core members of Evergrande who were taken away in a similar period of time also included Xu Jiayin's second son, Peter Xu, who once led the work of Evergrande Wealth; Pan Darong, former CFO of Evergrande, is mainly responsible for the capital operation of Evergrande; Former chairman of Evergrande Real Estate Group and Evergrande Property Group.
In fact, before Xu Jiayin, a number of Evergrande executives had been taken away for investigation.
According to the case report issued by the Nanshan Branch of the Shenzhen Municipal Public Security Bureau on September 16, Du Liang, the legal representative and executive director of Evergrande Wealth, and other suspected criminals have been taken criminal compulsory measures in accordance with the law.
At the same time, on September 15, the State Financial Regulatory Administration approved the establishment of Port Life, transferring the assets and liabilities of Evergrande Life as a whole. Since then, according to a number of media reports, Zhu Jialin, the former chairman of Evergrande Life, has been taken away for investigation in recent days and is currently missing.
The shareholders behind Evergrande Wealth and Evergrande Life Insurance are all involved in Evergrande Financial Group, while Evergrande Financial Group and Evergrande Real Estate belong to the two major platforms of the "Evergrande series".
Not only real estate and financial platforms, but Ke Peng, the former CEO of Evergrande Group, was taken away for investigation in January this year. According to Caixin, Xia Haijun, former vice chairman of China Evergrande's board, returned to China in the middle of last year and was controlled by relevant departments, and Pan Darong, the former executive director and chief executive, was also taken away.
Industry insiders said that in the early stage of the CSRC's investigation of Evergrande Real Estate, and the public security department's criminal compulsory measures against Evergrande Fortune Du and other suspected criminals, the result of Xu Jiayin's suspected illegal crime should not surprise too many people, and public opinion paid more attention to "when" to take action. Judging from the current public information, the issues he is involved in are likely to be related to multiple crimes, which are very complex and may take a considerable period of time to clarify.
丨The restructuring of foreign debt has been subject to variables
While the turmoil of Evergrande's senior management has attracted widespread public attention, the half-year-long debt restructuring work has also encountered resistance.
On September 22, China Evergrande announced that the Group's sales were not as good as the Company expected, and based on the Company's current situation and the negotiations between its advisers and creditors, the Company believes it is necessary to re-examine the terms of the proposed restructuring to match the objective situation of the Company and the demands of creditors. As a result, the relevant arrangements meetings on the proposed restructuring scheduled for September 25 (Tongji, a wholly-owned overseas subsidiary and Jingcheng, a Tongji subsidiary) and 26 September on the proposed restructuring will not be held.
This means that after repeated delays, China Evergrande's foreign debt restructuring agreement arrangement meeting is finally coming to an end.
On September 24, China Evergrande announced that in view of the fact that Evergrande Real Estate is under investigation, China Evergrande's current situation cannot meet the eligibility for the issuance of new notes.
The issuance of the new notes is an important part of China Evergrande's offshore debt restructuring plan, which involved more than US$19 billion. According to China Evergrande's disclosure at the end of March, the main plan for the company's overseas debt restructuring is to replace the original bonds with newly issued bonds: the new bonds have a maturity of 4 to 12 years and an annual interest rate of 2% to 7.5%; No interest is paid for the first 3 years, and interest is paid at 0.5% of the principal amount starting at the beginning of the 4th year.
With China Evergrande announcing that it is unable to meet the eligibility for the issuance of new notes, it means that the above plan is bound to undergo a large-scale adjustment. It is understood that all new notes to be issued by China Evergrande must comply with the "Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises" issued by the China Securities Regulatory Commission and the "Administrative Measures for the Review and Registration of Medium- and Long-term Foreign Debts of Enterprises" issued by the National Development and Reform Commission (NDRC) according to their applicable circumstances.
Item 4 of Article 8 of the Trial Measures for the Administration of Overseas Issuance of Securities and Listing by Domestic Enterprises clearly states that domestic enterprises that are under investigation due to suspected crimes or major violations of laws and regulations are being filed for investigation in accordance with the law, and have not yet reached a clear conclusion, they shall not issue and list overseas.
With sales not as expected, and the inability to meet the eligibility for the issuance of new notes, coupled with the compulsory measures taken by a number of management in accordance with the law, how will China Evergrande's overseas debt restructuring plan be adjusted? Industry insiders have become pessimistic about Evergrande's debt restructuring again. Bai Wenxi, chief economist of IPG China, pointed out that it is still uncertain whether Evergrande will eventually go bankrupt, and whether it will enter bankruptcy liquidation is not only a business operation and legal issue, but also needs to consider social issues such as "guaranteeing the handover of buildings". It is unrealistic for Evergrande to formally announce its bankruptcy proceedings before there is a practical solution to the problem of "guaranteed handover of buildings", but its prospects are indeed not optimistic.
Attached are recent developments of the company:
On the afternoon of July 24, Xu Jiayin, chairman of the board of directors of Evergrande Group, organized a meeting of Evergrande Baojiao, which lasted for more than half an hour. It is clear that one of the main tasks of regional companies is to cooperate with local special classes to revitalize assets and complete the work of guaranteeing the delivery of buildings, and the current task of guaranteeing the delivery of buildings for some projects is basically nearing the end.
On August 11, Evergrande Real Estate issued a number of reports that last year's net loss was 52.7 billion yuan, with a total debt of 1.8 trillion yuan, which was insolvent.
On August 14, an announcement by Evergrande Auto triggered public speculation about Xu Jiayin's marital status. Xu Jiayin's disclosed spouse, Ding Yumei, is stated in the agreement as a "third party independent of the Company and its related persons", and she also holds approximately 5.99% of the total issued shares of China Evergrande. It was once speculated by the market that Xu Jiayin and his wife had "technical divorce".
On August 18, according to multiple media reports, China Evergrande Group filed for bankruptcy protection in the United States on August 17. Evergrande seeks Chapter 15 protections from the U.S. bankruptcy law, which protects non-U.S. companies undergoing restructuring from creditors or seizure of assets in the United States. Subsequently, China Evergrande issued a clarification announcement in response to the market news of "bankruptcy protection": it is part of the normal promotion of overseas restructuring procedures and does not involve bankruptcy applications. ”
On August 31, Evergrande Wealth issued an announcement that because the company's asset disposal progress was not as expected, and the asset disposal funds were not obtained, the company could not carry out this month's payment, and the subsequent payment arrangement company will announce separately.
On September 15, the Shenzhen Regulatory Bureau of the State Financial Regulatory Administration said that Evergrande Life was seriously insolvent, and it had implemented close supervision and risk disposal, and the company was currently operating stably.
On September 16, the Shenzhen Nanshan Branch announced that criminal compulsory measures were taken against Du of Evergrande Fortune and other suspected criminals, and a number of executives were taken away overnight.
On September 22, China Evergrande Group released updated information on overseas debt restructuring. The announcement shows that since March 22 this year, the sales of Evergrande Group have not been as good as the company expected. Based on the Company's current circumstances and consultations with its advisers and creditors, the Company believes that it is necessary to revisit the terms of the proposed restructuring to match its objective circumstances and creditors' demands. In view of the above, the meetings on the proposed restructuring scheduled for 25 September and 26 September will not be held. If there are any changes to the terms of the proposed restructuring, the Company will announce it separately.
On the evening of September 24, China Evergrande released a blockbuster news: in view of the fact that Evergrande Real Estate Group is being placed on file for investigation, the current situation cannot meet the qualifications for the issuance of new notes.
On September 28, China Evergrande, Evergrande Property and Evergrande Auto all temporarily suspended trading at 9 am today.
On the evening of September 28, China Evergrande Group issued an inside information announcement saying that China Evergrande had received a notice from the relevant departments that Mr. Xu Jiayin, executive director and chairman of the board of directors of the company, had been taken compulsory measures in accordance with the law for suspected violations and crimes.
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