Recently, Hengda news constantly, Hengda real estate was investigated, workout stranded, executives were investigated one by one… The disposal of Hengda issues by regulators is constantly up the ante, Hengda, and the ending is getting closer and closer.
Evergrande cannot issue new bills
On the evening of September 24, China Evergrande released a bombshell message: in view of the fact that Evergrande Real Estate Group is being investigated, the current situation cannot meet the eligibility for the issuance of new notes.
There are relevant provisions for the issuance of bills by real estate enterprises. Article 8 of the "Pilot Measures for the Administration of Overseas Issuance of Securities and Listing of Domestic Enterprises" stipulates that there are five circumstances under which overseas issuance and listing shall not be allowed.One of them is that domestic enterprises are being investigated according to law for suspected crimes or major violations of laws and regulations, and there is no clear conclusion yet.
The "Hengda Real Estate Group is under investigation" mentioned in the announcement was on August 16 this year. Hengda Real Estate announced that it had received the "Notice of Filing a Case" issued by the China Securities Supervision Commission. Due to the company’s suspected information disclosure violations, the China Securities Supervision Commission decided to file a case against Hengda Real Estate.
In fact, after being investigated, he immediately knew that new bills could not be issued, and the announcement was made now, perhaps out of consideration for the resumption of trading in Hengda Hong Kong shares on August 28.
In addition, new notes cannot be issuedThat is, there is no way to issue bonds and borrow money, which means that Hengda’s blood transfusion pipeline is blocked from the financing end, and it also means that overseas workouts may end in failure.
Previously, Hengda’s workout voting meeting was pushed back and forth until September 22, when it directly announced that the workout meeting would not be held because sales were not as expected.
In March this year, Evergrande announced a restructuring plan for its $19.149 billion foreign debt, offering three options to creditors.
First, replace the old debt 1:1 with the new note,new billThe duration is 10 to 12 years.
Second, convert to a 5-9 year termnew billConverted into a combination of Hengda Property, Hengda New Energy Vehicles, or equity-linked notes linked to Hengda’s listed shares.
And thirdly,A combination of the above two…
That is to say, all three options require the issuance of new notes.
Now Hengda cannot issue new bills, financing channels are blocked, and workouts are also put on hold. It is clear that the Hengda issue has begun to close the net.
Many generals are being investigated
The first person to be taken away was Ke Peng, the former CEO of Evergrande Group. In January this year, he was taken away by the police for investigation because of his involvement in Hengda’s old reform in Shenzhen.
Shenzhen’s old renovation project was once regarded as Evergrande’s most important "ballast stone".
As early as 2016, Hengda’s financial report showed that it had 38 old renovation projects in Shenzhen, and the total value after all development would exceed 600 billion yuan. In 2019, Xia Haijun, then president of Hengda, once said that Hengda had 48 projects in Shenzhen, which was the largest developer of land reserves in Shenzhen, and the future income was unlimited. In 2020, Hengda’s financial report showed that Shenzhen accounted for 55 of the 104 old renovation projects laid out by Hengda.
But now it has been investigated, indicating that illegal activities may have been involved in the operation of these old renovation projects.
On September 16, Du Liang, general manager of Evergrande Wealth, and other suspected criminals were taken criminal coercive measures by Shenzhen public security. According to market news, the people arrested by Evergrande Wealth this time are all management.
Evergrande’s wealth is Xu Jiayin’s "money bag", which is used to provide financing for Evergrande’s own or related projects.
In August 2021, due to the difficulty of redemption, Evergrande announced that its financial products would stop selling to the outside world. According to the statistics of China Evergrande Group, from the initiation of financial products to the suspension of sales, the total amount of financing involved about RMB 92.10 billion yuan.
In September 2021, Evergrande’s wealth exploded, causing investors from all over the world to protect their rights. On September 10 of that year, Xu Jiayin publicly stated, "I can have nothing, but Evergrande’s wealth investors can’t have nothing. We must ensure that all maturing wealth products are repaid as soon as possible, not a penny less."
However, according to the "Internal Control Assessment and the Main Results of the Review of Certain Issues Raised by the Former Auditor" issued by Evergrande on August 24, 2023, as of December 31, 2022, Evergrande Wealth has not paid principal and interest of 34 billion yuan.
On August 31, Hengda Wealth once again issued a document saying that due to the lower than expected progress of asset disposal and the lack of asset disposal funds, it could not be redeemed for the month. From 8,000 yuan per month to 2,000 yuan per month, and then completely unable to redeem, in less than two years, Hengda Wealth’s cash flow has completely dried up.
Now it seems that Xu Jiayin’s lofty words at that time were nothing more than a delaying strategy, and now they cannot be repaid. Evergrande’s wealth may be suspected of crimes.
On September 21, Zhu Jialin, the former chairperson of Evergrande Life Insurance, was investigated.
Evergrande’s other purse is "Evergrande Life Insurance", which was fully taken over by Haigang Life Insurance, a newly established state-owned insurance company, due to serious insolvent.
In the heyday of Evergrande Life Insurance, it was responsible for "blood transfusion" for various businesses. Like Evergrande’s wealth routine, it sold high-yield universal insurance to attract the purchase of insurance products, and funneled the money to Evergrande’s real estate, automobile and other businesses through trusts and other means.
Hengda life is 2015 through the new Great Eastern Life Insurance changed its name, the total assets from 73.10 billion yuan in 2016 to 241.50 billion yuan in 2020, net profit has dropped from 1.243 billion yuan in 2017 to 333 million yuan in 2020, serious insolvent, the industry said its previous financial report may have problems, as the chairperson of Hengda life Zhu Jialin, may be involved.
On September 26, the latest news from Caixin English Network said that Xia Haijun, the former CEO of China Evergrande, and Pan Darong, the chief financial officer, have both been controlled or taken away.
Xia Haijun, the former president of Evergrande, is the most famous and responsible person in Evergrande besides Xu Jiayin, and is known as the "working emperor of the real estate industry".
Before Hengda’s thunder, the then president Xia Haijun immediately sold his holdings of Hengda dollar debt, cash 56.688 million dollars (about 360 million yuan), in 2021, Xia Haijun also successively reduced his holdings of Hengda property, Hengda Auto, Hengda RV Bao shares, a total of about 1.0155 billion Hong Kong dollars (about 827.20 million yuan).
In March 2022, Hengda Property was exposed 13.40 billion deposits were enforced, and with further investigation of the incident, the three executives involved, Xia Haijun, Pan Darong and Ke Peng, were asked to resign by the board of directors.
Xia Haijun has been the No. 2 figure in Evergrande for more than a decade. Major events in Evergrande’s development history are inseparable from Xia Haijun’s participation and decision-making, including Hengda’s financial management.
Xia Haijun and others were controlled by the relevant departments, which is a very obvious signal that the relevant departments have dealt with Evergrande, or have reached the stage of closing the net, even the executives who have left before cannot escape responsibility.
It’s hard to get back
With the "capable generals" around Boss Xu being caught one by one, Evergrande is not far from the finale.
Since Hengda’s explosion, the fire sale of Hengda’s shares, the "technical" divorce, and the filing for bankruptcy protection in the United States may pay for this series of "lying down" operations.
In the past six months, China Hengda has repeatedly disclosed that Hengda Real Estate is involved in major litigation and fails to pay off due debts. Among them, as of the end of July, Hengda Real Estate involves more than 30 million yuan in pending litigation, a total of 437.743 billion yuan in due and unpaid debts 2775.01 billion yuan, and a total of 207.50 billion yuan in overdue commercial tickets. Up to now, Hengda Real Estate has more than 600 information on the person subject to execution, and the total amount of execution exceeds 55.70 billion yuan. In addition, there are many restrictions on consumption orders, dishonest persons subject to execution (Lao Lai) and final case information.
Hengda since the second half of 2021 large-scale exposure to debt risk, nearly two years is still difficult to ease the pressure on funds, as of the end of June this year after excluding contractual liabilities of 1.78 trillion yuan, involving a large number of loans, payables, net assets negative 644.20 billion yuan. According to incomplete statistics, Hengda is currently involved in the country’s unfinished housing reached 1.60 million sets, which is behind 1.60 million families, close to 5 million people. The regulatory authorities left Xu boss time, or just to let him complete the task of "guaranteeing the building" as much as possible.Author | Wang Jian
