Chinese real estate company — whose ex-chairman is worth an estimated $11.2 billion — is accused of swindling investors

Chinese real estate company — whose ex-chairman is worth an estimated $11.2 billion — is accused of swindling investorsChinese real estate company — whose ex-chairman is worth an estimated $11.2 billion — is accused of swindling investors
The second-largest real estate developer in China, China Evergrande Group, is facing a massive liquidity crisis that has sparked anger among investors and homebuyers. 
Evergrande’s financial troubles: The company’s years of borrowing have resulted in a colossal debt, amounting to over more than $300 billion, and a struggle to pay overdue bills and multiple wealth management products, reported the Washington Post.
  • Riding on China’s real estate boom, Evergrande made numerous acquisitions in the past decade. Evergrande is a real estate developer but also dabbled in other businesses such as bottled water and electric cars. 
  • When China introduced measures that would monitor and manage the total debt level of major developers last year, Evergrande was forced to suspend housing projects and offload completed properties at discounted prices, according to the New York Times
  • Evergrande was previously able to stay afloat by relying on presales. According to Bloomberg, investors have made down payments on around 1.5 million properties.
  • Suppliers and creditors have hounded the company for hundreds of billions of dollars in outstanding bills, while homebuyers who paid for apartments that have yet to be completed have filed lawsuits. Eight hundred projects under Evergrande are unfinished, resulting in 1.2 million people still waiting for homes that they have already partially bought. 
  • The Shanghai Stock Exchange also halted trading on Evergrande’s May 2023 bond following a drop of over 30%. Evergrande’s Hong Kong-listed shares have so far dropped by over 80% this year.
The pitchforks have come: On Monday, a crowd of around 100 angry investors flocked to the headquarters of the failing Chinese company in Shenzhen amid rising concerns of its collapse, Reuters reported.
  • The protesting crowd gathered in the establishment’s lobby demanding repayment of loans and products.
  • Over 60 uniformed security officers blocked the building’s main entrances by midday as protesters shouted at company representatives addressing the crowd.
  • The company’s legal representative Du Liang read a proposal to the crowd which laid out plans for repayments for wealth management products holders. 
  • Based on Evergrande’s proposal, investors may “choose to accept 10% of the principle and interest of the matured product now and the rest via 10% installments quarterly, payment by property assets, or by using the outstanding product value to offset home purchase payments.”
  • The protesters jeered the proposal, with one woman responding, “A company as big as yours, how much money has been swindled from ordinary people?”
  • A protester, surnamed Wang, expressed concern that the proposed repayment would take two years, noting that “the company will be bankrupt by the end of the year.”
  • Wang said he had invested 100,000 yuan ($15,500) with Evergrande. His relatives have also invested about 1 million yuan ($155,005) in total.
  • On Thursday, security personnel took away protesters who remained gathered outside the company’s headquarters.
Evergrande founder Hui Ka Yan, whose current net worth remains at $11.2 billion, resigned from his position as chairman of the company’s main real estate arm last month. 
Featured Image via AFP News Agency
Share this Article
Your leading
Asian American
news source
NextShark.com
© 2024 NextShark, Inc. All rights reserved.