Evergrande's Hui cuts stake for first time in race for cash

[BEIJING] China Evergrande Group Chairman Hui Ka Yan cut his stake in the company for the first time since it went public in 2009, the latest sign he's liquidating personal assets to help stave off a default by the world's most indebted developer.

Hui sold 1.2 billion Evergrande shares for the equivalent of US$344 million on Thursday, according to a filing to the Hong Kong Stock Exchange.

That pares his stake together with that of his wife to 67.87 per cent from 76.96 per cent, the filing showed Friday. Chinese regulators have urged Hui to use his own wealth to help shore up the finances of his distressed property empire, which has liabilities exceeding US$300 billion.

He has injected more than US$1 billion into Evergrande since July, mainly by disposing of personal assets and pledging shares, China Business News reported last week. Hui sold the shares at an average HK$2.23 each, the filing showed. That was a 20 per cent discount to the closing price on Wednesday.

The document didn't identify the buyers. Shares of Evergrande closed 10 per cent lower at HK$2.50 (S$0.52) on Friday before the filing was made, taking this year's decline to 83 per cent.

The disclosure helps shed some light on a series of large Evergrande share transfers in Hong Kong's Central Clearing and Settlement System that had piqued traders' interest over the past week.

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The emergence of a 2.8 billion share position in the clearing system last Friday had fuelled speculation that Hui might be preparing to transfer ownership or pledge the stake as collateral for loans. It now appears that Hui sold 1.2 billion of those shares, though it's unclear what might happen to the remainder of the stake.

Despite several last-minute payments on dollar debt in recent weeks, Evergrande's bonds are trading at deep discounts to par value as investors brace for what could be one of China's largest-ever debt restructurings. The company's dollar note due March 2022 was trading around US$0.33 on the dollar on Friday.

Evergrande, which has businesses ranging from electric vehicles to bottled water, has been selling assets to raise cash as regulators clamp down on leverage in the property industry. The company agreed last week to dump all its remaining shares in internet business HengTen Networks Group. Its soccer stadium has been taken over by a government body with a view to selling it, Reuters reported earlier Friday.

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