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Hong Kong Agencies Suing Evergrande Over Commissions

Two Hong Kong property agencies are suing the grossly indebted China Evergrande Group over alleged unpaid debts, while two other developers have seen their bonds hit hard


Hong Kong has 'very minimal' exposure to China Evergrande, its Financial Secretary has said. File photo: AFP.

 

Two Hong Kong property agencies are suing heavily indebted China Evergrande Group over unpaid commissions, according to a court filing and media reports, piling pressure on the developer as it scrambles to raise funds and avert a collapse.

Centaline filed a suit against Evergrande in September to recover HK$3.1 million ($398,196) in overdue commissions, a court filing showed, while the South China Morning Post newspaper reported Midland Holdings is claiming unpaid commission of HK$43.45 million for two developments in Hong Kong.

An executive at Centaline China said they have also filed a suit against Evergrande in a Guangzhou court in southern China, seeking to claim hundreds of millions of yuan it says it is due.

Centaline confirmed that it filed a claim in Hong Kong last month, but declined to comment further. Midland declined to comment, saying the case was going through legal procedures. Evergrande did not immediately respond to a request for comment.

 

HK Exposure ‘Minimal’

Hong Kong’s exposure to debt-laden developer China Evergrande is “very minimal” at 0.05%, or HK$14 billion ($1.79 billion) of banking assets and will not cause any systemic risks, the newspaper reported on Sunday, citing the city’s Financial Secretary Paul Chan.

Evergrande has vowed to repay its suppliers and contractors in mainland China as soon as possible, in some cases offering apartments or other real estate assets, as construction at many of its sites have halted because of delayed payments.

With liabilities of $305 billion, Evergrande has sparked concerns its cash crunch could spread through China’s financial system and reverberate globally, a worry that has eased with the Chinese central bank’s vow last week to protect homebuyers’ interests.

Growing worries about defaults at Chinese property developers triggered a rout in their shares and bonds on Tuesday with fresh credit rating downgrades and uncertainty about the fate of cash-strapped China Evergrande Group sapping investor sentiment.

Last month it missed coupon payments on two dollar bond tranches and is scrambling to sell assets to pay creditors, prioritising repayment to onshore lenders in the last few weeks.

 

Other Developers Hit

The government’s move to deleverage huge debts in the property sector has hit other developers this week, with Central China Real Estate and Greenland the latest companies to see their bonds battered.

Frantic selling broke out after mid-sized developer Fantasia Holdings missed a bond payment on Monday. Fantasia issued a statement last month that it had sufficient working capital and no liquidity issues.

But both Fantasia and Kaisa Group saw their dollar-denominated bonds slump as much as 11 cents on Tuesday after Fantasia’s bonds had been pummelled to below 20 cents on the dollar on Monday following its missed payment.

Others hit by the selling included R&F Holdings subsidiary Easy Tactic, Central China Real Estate and Greenland Holdings, a company which recently built Sydney’s tallest residential tower and has plans to do the same in London.

 

• Reuters with additional editing by Jim Pollard

 

ALSO SEE:

China Property Default Woes Deepen on Evergrande Uncertainty

Chinese Homebuilder Fantasia’s Rating Downgraded by Fitch Over Bond Fears 

China Property Developers Facing Worst Debt Crisis In A Decade

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