China Evergrande to be delisted from Hong Kong stock exchange following debt woes

A man walks past the entrance of the headquarters of China Evergrande Group in Hong Kong, Monday, Oct. 4, 2021. (AP Photo/Vincent Yu, File)

HONG KONG — China Evergrande on Tuesday said it will be delisted from Hong Kong’s stock exchange on Aug. 25, more than a year and a half after the city’s court ordered the heavily indebted real estate developer to be liquidated in another setback to mainland China’s property sector.

Evergrande was the world’s most heavily indebted real estate developer, with US$300 billion owed to banks and bondholders, when the court handed down a liquidation order in January 2024.

The court ruled the company had failed to provide a viable restructuring plan for its debts, which fuelled fears about China’s rising debt burden, and trading of its shares has been halted since the ruling.

The city’s listing rules stipulate the listing of companies may be cancelled if trading in their securities has remained suspended for 18 months consecutively.

China Evergrande Group received a letter Aug. 8 from the city’s stock exchange notifying the firm of its decision to cancel the listing as trading had not resumed by Jul. 28. The last day of the listing will be Aug. 22 and Evergrande will not apply for a review of the decision, the company said in a statement.

“All shareholders, investors and potential investors of the company should note that after the last listing date, whilst the share certificates of the shares will remain valid, the shares will not be listed on, and will not be tradeable on the Stock Exchange,” the statement said.

Evergrande is among scores of developers that defaulted on debts after Chinese regulators cracked down on excessive borrowing in the property industry in 2020. Unable to obtain financing, their vast obligations to creditors and customers became unsustainable.

The crackdown also tipped the property industry into crisis, dragging down the world’s second-largest economy and rattling financial systems in and outside China. Once among the nation’s strongest growth engines, the industry is struggling to exit a prolonged downturn. Home prices in China have continued to fall even after the introduction of supportive measures by policymakers.

The Hong Kong court system has been dealing with liquidation petitions against some Chinese property developers, including Country Garden, which is expected to have another hearing in January.

Evergrande, founded in the mid-1990s by Hui Ka Yan, also known as Xu Jiayin, had over 90 per cent of its assets on the Chinese mainland, according to the 2024 judgement. The firm was listed in Hong Kong in 2009 as “Evergrande Real Estate Group” and suspended its share trading on Jan. 29, 2024, closing at 0.16 Hong Kong dollars ($0.02).

Hui was detained in China in September 2023 on suspicion of committing crimes, adding to the company’s woes.

In 2024, the China Securities Regulatory Commission issued a fine of 4.2 billion yuan (about $584 million) against the firm’s subsidiary, Hengda Real Estate Group Company, over violations including falsifying financial records. Hui was fined 47 million yuan ($6.5 million) and barred from China’s securities markets for life. Some other executives were also penalized.

Chinese authorities in September 2024 banned the accounting firm PwC for six months and fined the company more than 400 million yuan ($56.4 million) over its involvement in the audit of the collapsed property developer.

Kanis Leung, The Associated Press