China Evergrande, a deeply indebted developer, will be removed from the Hong Kong stock exchange. The company is already undergoing liquidation. This marks another blow to China’s property market.
Evergrande was once the world’s most indebted developer. It owed over $300 billion to banks and bondholders. A court ordered its liquidation in January 2024. The court found the company lacked a workable debt plan. This raised worries about China’s growing debt. Trading of its shares had been halted since that ruling.
Company rules allow delisting if shares are suspended for 18 months.
Hong Kong’s stock exchange sent Evergrande a notice on August 8. It stated the decision to cancel its listing. Trading had not resumed by July 28. The last day for trading will be August 22. Evergrande will not appeal this decision, the company stated.
The company’s statement warned shareholders. It said shares will remain valid after delisting. However, they will not be listed or traded on the exchange.
Evergrande is one of many developers to default. This happened after China’s 2020 crackdown on property borrowing. Developers struggled to get financing. Their large debts to creditors and customers became unmanageable.
The crackdown triggered a property industry crisis. It slowed China’s economy. It also caused financial concerns globally. The property sector, once a growth driver, is in a long slump. Home prices in China keep falling. This is despite government efforts to help.
Hong Kong courts handle liquidation cases for Chinese developers. Country Garden, another major developer, faces a hearing in January.
China South City Holdings, a smaller developer, also faced liquidation Monday.
Evergrande started in the mid-1990s. Most of its assets were on mainland China. This was stated in the 2024 court ruling. The company listed in Hong Kong in 2009. Its shares were suspended on January 29, 2024. They traded at $0.02 then.
Liquidators received debt claims totaling $45 billion by July 31. This is much higher than the $27.5 billion reported in December 2022. The liquidators noted this number is not final.
Liquidators control over 100 companies in the group. Their assets were valued at $3.5 billion in January 2024. An estimate of their final value is not yet available.
About $255 million in assets have been sold. Liquidators called this a “modest” amount. Most came from subsidiary assets. Ownership structures affect how much is available.
Liquidators believe a full restructuring is unlikely. They will still consider any viable options.