Evergrande's Hui forced to trim stake in company

[BEIJING] China Evergrande Group Chairman Hui Ka Yan was forced to sell pledged shares in the company, according to disclosures that came a day after the developer was officially labelled a defaulter for the first time.

The disposal of 277.8 million shares brings Hui's stake to 59.78 per cent from 61.88 per cent, filings to the Hong Kong stock exchange showed on Friday.

While no transaction value was given, the shares were worth US$64 million , based on the average price when they were sold this week, according to Bloomberg calculations.

Billionaire founder Hui has been pledging stock to raise funds as his property group teeters under the weight of liabilities exceeding US$300 billion.

Fitch Ratings cut Evergrande to restricted default on Thursday after it failed to make two coupon payments on time. The world's most indebted developer now faces a massive restructuring.

The transactions came after Hui sold 1.2 billion shares in late November, his first divestment since Evergrande went public in 2009. The forced sale started on Monday, the first business day after the troubled firm said it planned to work with creditors on a restructuring plan for its offshore debt.

It continued for four trading days through Thursday, according to the exchange filings.

"Steps have been taken to enforce a security interest in the shares, or rights to such shares held as security against" Hui, the filings said. They didn't identify the buyers and it's unclear whether the sales were part of 500 million shares Hui pledged in October.

BLOOMBERG