Fall from grace: Evergrande's debt journey since China's 'three red lines' policy

A LOT has happened in one year for China's second-largest developer China Evergrande - which has now grown to be the most indebted.

Since its founding in 1996 by Hui Ka Yan, the property developer has expanded rapidly thanks to aggressive leverage.

But its business strategy is fast unravelling, especially since the rollout of China's "three red lines" policy - a trio of metrics that policymakers have used to encourage the property industry to deleverage.

Failure to meet these metrics means no access to new bank loans, and Evergrande is currently short on two of them.

Here's a look back at what has happened in the past year.

2020

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August: China rolls out its "three red lines" policy.

Sept 8: Evergrande kicks off a nationwide sales promotion offering a 30 per cent discount on all real estate properties, in a bid to boost sales and cut debt.

Sept 26: The group obtains approval from the Hong Kong stock exchange to restructure and spin off its property management unit.

Nov 24: Evergrande obtains a US$4.6 billion investment from state-linked companies. It also lines up 23 cornerstone investors for the spinoff of its property services arm.

Dec 2: Shares of Evergrande Property Services fall marginally on their Hong Kong debut. The stock opened at HK$8.84 (S$1.53) per share, a 0.45 per cent premium to the HK$8.80 initial public offer price, but closed 0.2 per cent lower at HK$8.78. It fell as much as 3 per cent during the session.

2021

March 30: Evergrande raises HK$16.4 billion by selling a 10 per cent stake in its online home and car sales platform FCB Group ahead of a planned listing in the United States.

May 13: The group raises HK$10.6 billion selling shares in its electric vehicle unit. The sale amounts to about 2.7 per cent of outstanding shares in China Evergrande New Energy Vehicle Group at the time.

June 7: Evergrande says it will buy back HK$336 million of its own shares.

June 9: Chinese regulators reportedly instruct major Evergrande creditors to conduct a fresh round of stress tests on their exposure to the developer.

June 20: The group sells further stakes in its internet unit HengTen Networks Group at HK$6 apiece, raising US$570 million in the process.

June 22: Bloomberg reports several large Chinese banks are restricting credit to Evergrande, amid mounting concern of the developer's financial health.

June 24: Evergrande says it has arranged its own funds of HK$13.6 billion to repay bonds due on June 28, as well as to pay interest on all other dollar bonds, sending its shares sharply higher.

July 13: A court in Jiangsu province ordered the freezing of a 132 million yuan (S$27.4 million) bank deposit held by a unit of Evergrande at the request of China Guangfa Bank.

July 21: Some banks in Hong Kong, including HSBC and Standard Chartered, are reported to be declining loans to buyers of Evergrande's two uncompleted residential projects in the city.

July 28: Evergrande drops plans to declare a special dividend, less than two weeks after flagging it to investors.

July 31: Huaibei Mining Holdings says its construction unit is suing Evergrande over an overdue 400 million yuan payment. Evergrande says parties are disputing whether payment under the contract is due.

Aug 2: The group agrees to sell stakes in its internet unit HengTen Networks Group worth a total of HK$3.25 billion.

Aug 17: Mr Hui steps down as chairman of China Evergrande Group's onshore real estate unit - Hengda Real Estate.

Aug 19: China's central bank says it has summoned Evergrande's executives to talks and issues a warning that the company needs to reduce its debt risks and prioritise stability.

Aug 25: Piping supplier Yonggao says in a Shenzhen exchange filing that Evergrande owes it 478 million yuan in commercial bills, of which 195 million yuan is overdue. It adds that it could sue the developer, and that it has stopped deliveries since May.

Aug 26: Chan Hoi-wan, a key Evergrande backer and long time supporter of Mr Hui, cuts her stake to 8.96 per cent from 9.01 per cent. She is the chief executive officer of Chinese Estates Holdings and wife of Hong Kong billionaire Joseph Lau.

Aug 30: The group's electric vehicle unit warns it might have to delay car production unless it can secure more capital in the short-term. The Hong Kong-listed unit had reported a loss of 4.8 billion yuan for the six months to June 30.

Aug 31: Evergrande says its total liabilities have hit a near-record 1.97 trillion yuan, mainly due to swelling bills to suppliers. Although its borrowings shrank to 572 billion yuan, the group's cash and cash equivalents had plunged to a six-year low.

Sept 3: Contracted sales, including amounts offset through the sale of property units to suppliers and contractors, dropped 26 per cent to 38.08 billion yuan, from 51.48 billion yuan the year before, a filing showed.

Sept 6: Trading in Evergrande's bonds is suspended following "abnormal fluctuations".

Sept 9: Regulators in Beijing were tipped to have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve.

Sept 14: The group warned of a risk of cross-default as two of its subsidiaries had failed to discharge guarantee obligations for 934 million yuan worth of wealth management products issued by third parties.

READ MORE: 

• Evergrande's teeter may clear path for Singapore players in China
• Struggles facing China's Evergrande not panicking markets - yet
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• Evergrande's heavy discounts fail to boost August property sales
• Evergrande's billionaire boss exudes calm as debt risks grow
• Rich friends who helped Evergrande tycoon count their losses
• Why Evergrande's investors can't afford to force a default