HONG KONG, Nov 7, 2022 (AFP): Struggling Chinese property giant Evergrande has had a lucrative building plot in suburban Hong Kong sold off by its American receiver to cover some of the company's massive debts, according to company filings.
The undeveloped plot in the border district of Yuen Long was sold for nearly $637 million, with Evergrande saying it expected to record a loss of approximately $770 million on the land, according to a statement filed on the Hong Kong stock exchange on Sunday evening.
"The proceeds from such sale will be used to repay the company's financial obligations in relation to the project," Evergrande said.
Property and construction account for around a quarter of China's gross domestic product, but crippling debts have forced a series of developers to default on loans in recent months while others have struggled to raise cash.
Evergrande has become a poster child of the cash crisis carving a swathe through China's property sector, with an estimated $260 billion in debts.
The Yuen Long land was first seized by the Los Angeles-based asset management fund Oaktree Capital in January 2021 as security when Evergrande defaulted on $600 million it had borrowed.
Evergrande spent more than $1.13 billion to obtain the vast plot right next to Hong Kong's Mai Po Nature Reserve -- an internationally significant wetland known as a "paradise for birds".
The group originally proposed to develop 268 villas on the land, with a huge palace-like mansion at the centre that it hoped to sell for $510 million.
Last week Hong Kong media reported that three mansions in the city's prestigious Peak district owned by Evergrande founder Hui Ka-yan had been seized by the China Construction Bank and Japanese financier Orix as repayment for loans.
The total market value of the three mansions was estimated to be $318 million, according to online news outlet HK01.
The company is also looking to sell its headquarters in Hong Kong which occupies a highly sought-after patch of land on the harbour front.
Evergrande's troubles are emblematic of the problems rippling across China's massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash.
The giant was originally due to unveil a restructuring plan in July, but the announcement was postponed to an unspecified date.
Trading of shares of Evergrande listed in Hong Kong has been suspended since late March. - AFP
