China Evergrande Loses Support of Hong Kong Tycoon Amid Debt Crisis
Joseph Lau and Chan Hoi-wan in 2017. Their company had a 6.5% stake in China Evergrande Group before its recent selloff.
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By
Updated Sept. 23, 2021 10:55 am ET
A major shareholder in
plans to sell all of its stock in the ailing Chinese real-estate developer, potentially incurring losses of more than $1 billion in the process.
, which is controlled by Hong Kong billionaire Joseph Lau and his wife, Chan Hoi-wan, said Thursday it had recently pared its stake in Evergrande to about 5.7% from nearly 6.5%, and it was seeking shareholder approval to potentially sell the remainder.
Chinese Estates spent the equivalent of $1.75 billion acquiring the stake in 2017 and 2018, and paid $86 million to buy Evergrande bonds, its filings show.
Now, the company said its board was cautious and concerned about Evergrande, including the company’s liquidity issues and the risks to its finances and operations if it failed to take successful measures to fix its problems.
Chinese Estates also cited a significant decline in Evergrande’s share price, plus stock-market volatility and changing market and economic conditions.
Evergrande stock jumped about 18% Thursday, after the company resolved an onshore bond payment on time Wednesday, but it remains down more than 82% this year. Investors are watching to see if Evergrande can pay an $83.5 million coupon due Thursday on a dollar-denominated bond.
Based on Evergrande’s closing stock price Tuesday of 2.27 Hong Kong dollars a share, and the shares already sold, Chinese Estates estimated a full selldown could cause it a loss of about 10.9 billion Hong Kong dollars, the equivalent of about $1.4 billion. It said any sale would depend on market conditions.
Mr. Lau and Ms. Chan’s holdings in Evergrande include other shares not held through Chinese Estates. They pared their total stake to 7.96% as of Sept. 10, a filing showed. The duo are the biggest shareholders in Evergrande outside of the company’s chairman,
Hui Ka Yan,
and his wife, Ding Yumei.
Chinese Estates also sold a Hong Kong office block to Evergrande in 2015 for the equivalent of about $1.6 billion. That building was later renamed the China Evergrande Centre and is now among the assets Evergrande is trying to sell to raise cash.
In 2014, a Macau court found Mr. Lau guilty of bribery and money laundering in relation to a land deal in the Chinese gambling hub. Mr. Lau resigned as chairman and chief executive of his company after the conviction. Ms. Chan was made an executive director of Chinese Estates in 2017 and became CEO in February of this year.
—P.R. Venkat and Ben Otto contributed to this article.
China Evergrande Group: Stalled Construction, Massive Debts
Write to Frances Yoon at [email protected]
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