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Evergrande is subject to liquidation proceedings in Hong Kong

A shareholder in China’s Evergrande Fangchebao (FCB) unit said on Monday (27) that it has filed a liquidation petition for the Hong Kong real estate developer as the company failed to honor a repurchase agreement on shares acquired in the FCB.

This is Evergrande’s first known liquidation petition.

The group has more than $300 billion in liabilities and its offshore debt was found to be in default after failing to meet payment obligations late last year.

Investment holding company Top Shine Global last March bought 0.46% of FCB, an online real estate and automotive marketplace, for $750 million from Hong Kong ($95.6 million).

The transaction took place as part of Evergrande’s sale of 10% of the unit to 17 investors for a total of US$2.10 billion ahead of a planned initial public offering (IPO) of the FCB.

A Top Shine executive told Reuters that under the deal, if an IPO doesn’t materialize by April 8 of this year, Evergrande would have to buy back the shares at a 15% premium.

In the petition, Top Shine demands that Evergrande honor the share repurchase agreement, the executive said, without elaborating. The person declined to be identified due to the sensitivity of the matter.

Evergrande did not immediately respond to a request for comment on the petition.

Hong Kong High Court records showed the petition was filed on Friday, and a hearing will be held on August 31, according to the body’s website.

The source added that the decision to file the lawsuit is independent of Evergrande’s restructuring process, although Top Shine is considered a creditor.

Top Shine’s ultimate beneficiary is Lin Ho Man, who also invested a further 0.46% in FCB through another entity, Triumph Roc International, according to a filing last year.

Source: CNN Brasil

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