Trading of China Evergrande Group’s shares will remain suspended, as the collapsed developer’s liquidators see no path to a restructuring owing to the firm’s massive debt and various business challenges.
“In the absence of substantial new investment into the company, the liquidators do not currently see a path to a restructuring that would enable the company to satisfy the resumption guidance and a resumption of trading in the shares,” the liquidators said in a filing on Friday to the Hong Kong stock exchange.
Evergrande’s shares have been suspended from trading since January 29, following the Hong Kong High Court’s order to liquidate the world’s most indebted developer, with liabilities exceeding US$300 billion. The company had failed to present a concrete restructuring plan more than two years after defaulting on its offshore debt.
The liquidators said they have made “modest realisations of assets” of Evergrande, but pointed out that the company’s “liquidity and other internal resources remain limited” amid its “level of indebtedness and the challenges faced by the group’s business and operations”.
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A vanishing fairyland dream: how China Evergrande rose, then crashed
A vanishing fairyland dream: how China Evergrande rose, then crashed
The latest quarterly report of the liquidators show the continued depressing state of affairs at Evergrande, months after the China Securities Regulatory Commission slapped the firm with a 4.2 billion yuan (US$583.4 million) fine and barred founder Hui Ka-yan from the capital markets for life after the developer was found inflating its sales by 564 billion yuan in the years preceding its eventual collapse.
The liquidators’ assessment comes just days after they started legal action against PwC and its mainland unit PwC Zhong Tian, accusing the auditor of “negligence” and “misrepresentation” in its work for Evergrande between 2017 and the first half of 2018.
China’s Ministry of Finance and Hong Kong Accounting and Financial Reporting Council are assisting each other in their separate investigations of PwC’s audit work for Evergrande, based on an agreement signed between the two regulators in 2019.
Since May, a number of state-owned firms have let go of PwC as their auditor, including China Merchants Group, China Cinda Asset Management, PetroChina and China Railway Group.
Despite efforts by state and local authorities to support developers and bolster confidence among homebuyers, property prices on the mainland have continued to fall, adding further pressure on the country’s cash-strapped developers.
Data from the National Bureau of Statistics published last month showed that prices of newly built homes declined for the 13th consecutive month in June, down 0.7 per cent month on month, while the cost of lived-in homes dropped 0.9 per cent in the same period.
The property downturn saw land purchases in the first seven months of this year falling 38 per cent year on year to 430.7 billion yuan, according to data published earlier this month by the China Index Academy.
Some of the nation’s biggest private developers, including China Vanke and Longfor Group, could report an average 19 per cent drop in net profit in the first half of this year, according to estimates by CGS International Securities.
