Evergrande chief Hui Ka Yan ‘should be selling his things’ to pay debt

Hong Kong — As developer China Evergrande scrambles to meet its debt obligations, its founder is freeing up funds from luxury assets including art, calligraphy and three high-end homes, according to filings and a person with knowledge of the matter.

Chinese authorities have told Evergrande chair Hui Ka Yan to use some of his personal wealth to help pay bondholders, two separate people with knowledge of the matter told Reuters in October.

Evergrande’s troubles in meeting bond repayments have rattled markets and left many of its investors, creditors and suppliers in financial chaos.

Guo Hui, whose cleaning business is owed more than 18-million yuan ($2.8m) by Evergrande, had to sell his Porsche Cayenne and an apartment to raise cash and pay debts.

“He should be selling his things,” Guo told Reuters. “He had no choice once the authorities made him.”

Hui pledged one of his Hong Kong mansions of about 460m² in The Peak, Hong Kong's most prestigious residential enclave with sweeping views over the city's gleaming skyscrapers, for a loan from China Construction Bank in October, according to a filing with Hong Kong's Land Registry.

The property is worth about HK$800m ($103m), an estate agent told Reuters and local media said it was pledged to raise about HK$300m to repay an overdue Evergrande bond.

The tycoon, ranked as Asia's wealthiest man in 2017, pledged two other luxury houses in the same development to Orix Asia Capital Ltd on November 8 for undisclosed amounts, according to the Land Registry. Local media outlet HK01 said on Tuesday the total amount raised was HK$821m.

One of the properties is worth HK$800m, the estate agent said, while the other one is bigger and according to HK01 is worth HK$1bn.

Hui and Evergrande did not respond to requests for comment regarding the properties on The Peak.

China's state council information office did not immediately respond to a request for comment.

Luxury assets

Raised by his grandmother in a rural village, Hui founded Evergrande in 1996 in southern Guangzhou city, supplying low-priced homes and building a fortune.

He developed a passion for calligraphy, art and Koi carp — fish seen as a symbol of good luck and fortune for which he paid tens of millions of yuan, according to a source with direct knowledge of the matter.

Under Hui's orders, Evergrande has been selling some art and calligraphy to raise fresh capital, said the source. The source declined to be named due to the sensitivity of the situation.

Reuters could not immediately determine how much had been raised by selling the art pieces or what the money has been used for.

Evergrande did not respond to a request for comment regarding the art sale.

The source also said Evergrande sold two Gulfstream jets in recent weeks.

The Wall Street Journal reported earlier in November that Evergrande raised more than $50m by selling two of its private jets to US aircraft investors.

Hui also owns a 60m yacht called “Event” estimated to be worth $60m, as well as a private Airbus jet, according to Chinese media reports.

Reuters could not independently verify the ownership of Hui's yacht and private jet.

Hui and Evergrande did not respond to requests for comment regarding his aircraft, yacht and other assets.

While Hui's net worth has plunged over the past few years from about $45bn in 2017, he is still estimated to be worth $11.3bn, according to the Hurun China Rich List 2021, released in October.

But even as he moves to sell some of his personal assets, the proceeds raised pale in comparison to Evergrande’s liabilities of more than $300bn, equivalent roughly to the GDP of SA.

After Evergrande last week again averted a destabilising default  with a last-minute bond payment, its next deadline is December 28, with coupon payments totalling more than $255m due.

Reuters