Ailing real estate giant China Evergrande has suffered another blow with one of its subsidiaries, Evergrande Group (Nanchang) Co Ltd, ordered to pay a guarantor $1.08 billion for failing to honour its debt obligations.
The struggling developer revealed the news on Sunday in a statement to the Hong Kong stock exchange.
It explained that in July 2021, the guarantor, who was not named in the statement, provided a guarantee for the borrowings of certain entities controlled by Evergrande.
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Nanchang provided counter-guarantees in the form of a pledge of a total of 1.3 billion shares that it held in Shengjing Bank Co Ltd.
“As the borrowers failed to repay the loans, the applicant carried out its obligations under the guarantee and claimed against the subsidiary under the pledge,” Evergrande said in a statement.
The ruling “is that the guarantor has the priority to receive compensation from the sale of the shares” and the “scope covers the amount paid by the applicant [7.3 billion yuan].”
Evergrande has said it was selling its Hong Kong headquarters via tendering process, a source with direct knowledge told Reuters on Thursday.
- Reuters with additional editing by Sean O’Meara
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