De Chinese regering lijkt Evergrande-oprichter Hui Ka Yan,te zullen dwingen zijn persoonlijk fortuin aan te spreken om de schulden van het bedrijf te helpen dekken.

Of dat genoeg zal zijn? Dat lijkt hoogst dubieus, maar het zou een aantal komende couponbetalingen moeten garanderen.

Hui Ka Yan, founder of China Evergrande Group, had once amassed a fortune of $42.5 billion, placing him at the top of the wealth rankings for all of Asia. But 73% of that immense fortune has now evaporated, and the tycoon will almost certainly lose even more as anxious creditors, suppliers and homebuyers besiege Evergrande’s offices.

China leek vorige week voorrang te geven aan Chinese beleggers bij couponbetalingen die aanstaande waren. Dat leverde grote onrust onder buitenlandse beleggers op, maar het doel – voorkomen van onrust onder Chinese beleggers – werd bereikt. Het heeft wat andere voordelen die hierdoor geopenbaard worden: de toekomstige aanpak die China zal kiezen in gevallen als dit.

In a new twist of how China may soon conduct corporate bankruptcies, Chinese authorities told Hui Ka Yan to use his personal wealth to “alleviate” China Evergrande Group’s deepening debt crisis, Bloomberg reported according to people familiar with the matter.
Beijing’s “directive” – which to us sounds just a bit m,more forceful than merely “urging” – to the Evergrande founder came after his company missed an initial Sept. 23 deadline for a coupon payment on a dollar bond, and takes place as local governments across China are monitoring Evergrande’s bank accounts to ensure company cash is used to complete unfinished housing projects and not diverted to pay creditors, the people said.

De Chinese bubbel is mede gebaseerd op een sterke onroerend goed markt, waar ook de regering van profiteert. Maar die wil er zelf geen geld in steken:

According to Bloomberg, the demand that Hui to breach the corporate veil and “tap his own fortune to pay Evergrande’s debt adds to signs that Beijing is reluctant to orchestrate a government rescue, even as the property giant’s crisis spreads to other developers and sours sentiment in the real estate market.”

Dit is vooral een waarschuwing aan andere tycoons:

Our read is slightly different: Beijing will still have to orchestrate a government rescue because while Yan’s fortune has shrank to “just” $7.8 billion from its 2017 peak of $42 billion, that would be a tiny fraction of the $300+ billion in debt and other liabilities the company owes. As such, Beijing’s demand is merely a warning to other oligarchs: if your company became over indebted and is suddenly no longer viable, your own fortune will be at risk.

De echte test komt aanstaande vrijdag pas:

To be sure, Beijing won’t have much trouble bringing its case to the people, especially those people who lost their life savings on Evergrande Wealth Management Products: Hui’s fortune is derived from his controlling stake in Evergrande and the cash dividends he’s received from the company since its 2009 listing in Hong Kong. Hui has pocketed about $8 billion over the past decade thanks to Evergrande’s generous payouts, according to Bloomberg calculations. So, flipping Beijing’s new paradigm of “shared prosperity” on its head to “shared misery”, it only makes sense for Yan to lose everything as his company slowly goes under.
While Evergrande surprised some China watchers by pulling back from the brink of default, paying a $83.5 million coupon to international bondholders before the grace period expired Oct. 23, the next big test will come as soon as this Friday when the 30-day grace period on another dollar coupon payment comes due. A hefty wall of maturing debt awaits in 2022, with some $7.4 billion of onshore and offshore bonds coming due.

Deze ontwikkeling verklaart in ieder geval iets:

It wasn’t clear where Evergrande’s debt repayment funds came from. Separately, Reuters reported that Hui agreed to put his own money into a Chinese residential project tied to a bond to ensure it’s completed and bondholders get paid.

De vraag is hoe lang dit werken zal. Niet lang, zegt de logica. Het bedrijf is de facto reeds overleden:

Unfortunately for Evergrande’s lenders, even if the billionaire backstops the debt with his personal funds, it won’t make much of a difference. The property giant’s operations have effectively frozen, as sales collapsed 97% in the most recent period, while there has been very little help from asset sales in recent months even after Hui put stakes in once-prized arms such as his electric vehicle and bottled water units on the block. Evergrande said last Wednesday it scrapped talks to offload a stake in its property-management arm. The deal fell apart even after officials in Evergrande’s home province of Guangdong helped broker the talks.

Deze maatregel zal derhalve vooral andere tycoons dwingen hun cash-positie te heroverwegen, en dat is de bedoeling van de regering in Beijing. De komende tijd moet worden voorkomen dat meer bedrijven in de onroerend goedsector omvallen wegens cash-tekorten om hun leningen gaande te houden. Of dat het vertrouwen in de markt zal herstellen is zeer de vraag, maar voor de Chinese regering is het noodzakelijk dat de indruk wordt gewekt. Ook al staat het land vol spooksteden van nieuw gebouwde appartementen die niemand betalen kan/wil.

Wie op Google-afbeeldingen zoekt op Chinese ghost towns krijgt een collectie beelden als dat hierboven: steden waar nooit iemand zal gaan wonen, maar die wel op de balans van bedrijven als Evergrande drukken.

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Verrassend veel meer over Evergrande vindt u hier.