The Chinese giant that operates in the field of real estate development is collapsing under the weight of its 100 billion dollars of debt
The default risk is concrete for Evergrande, a Chinese giant operating in the field of real estate development. The situation risks overwhelming the entire sector in China, as well as international investors. Evergrande is in fact collapsing under the weight of its $ 100 billion in debt and – as he points out The sun 24 hours – today the Shanghai Stock Exchange has decided to temporarily stop trading bonds expiring in July 2022 following “anomalous fluctuations”. A situation he talks about in detail calcioefinanza.it, that it also closely concerns Suning and in particular Zhang Jindong.
“Over the past year, Evergrande’s profits have plummeted by 29%, $ 1.6 billion in absolute numbers. Evergrande is short of cash and does not know which path to take to be able to meet its corporate debt commitments due in the coming months. […] Evergrande is considered “too big to fail”, but it is private and the state’s room for maneuver is much narrower. The eyes of Zhang Jindong are also focused on the situation of the Chinese giant, who through Suning Holdings Group controls Inter, Italian Champion in Serie A.
In 2017 Zhang, not through the listed Suning.com but through a subsidiary of Suning Appliance, had advanced capital to Evergrande for 20 billion yuan (about 2.6 billion euros), by subscribing class A shares of Evergrande Real Estate (also known as Hengda Real Estate) destined for public listing, with the promise of strong dividends. Thanks to the support of Suning and other Chinese private groups, Evergrande had thus collected a total of 130 billion yuan (about 16.65 billion euros), thanks also to the promise that in the event that the listing of the class A shares of Evergrande Real Estate had not materialized, the investments would have paid off by March 2021.
However, in the autumn of last year, after yet another postponement of the listing project, some investors agreed not to exercise redemption options for the shares paid, avoiding Evergrande’s liquidity crisis. Among them also the same Zhang Jindong who agreed to review the agreement with Evergrande’s owner, Xu Jiayin. Zhang therefore renounced asking for the repayment of the 20 billion yuan, thus maintaining the immobilized stake in Evergrande Real Estate (news from which are the pressures on Suning’s debt and which led to the crisis of the group in recent months).
According to inf.news, Zhang’s investment would have lost even 80% of its value, given that the valuation of Evergrande Real Estate would now be equal to 425 million yuan, and – consequently – the stake held by Suning Appliance would be 3.84 billion yuan (approximately 500 million euros). Value that could be completely reset in case of default of the Evergrande group”, it is read.
September 6, 2021 (change September 6, 2021 | 15:27)
© REPRODUCTION RESERVED