EXCLUSIVE-China audits Evergrande, president’s assets, no discount sales at this time -sources


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BEIJING / HONG KONG, December 15 (Reuters)Chinese authorities scrutinize the assets of the China Evergrande group 3333.HK and its wealthy chairman Hui Ka Yan, but do not expect any discount sales at this time from the world’s most indebted real estate developer, two sources with direct knowledge of the matter said.

The previously unpublished audit shows how Beijing takes control of Evergrande after the real estate giant missed payment on two foreign bonds, triggering a restructuring to deal with liabilities of more than $ 300 billion. Evergrande dollars.

Assessing the value of assets and determining if there are any hidden assets will also allow authorities to decide whether a bailout involving public entities is necessary, the sources said.

The fate of Evergrande and other indebted Chinese real estate companies has weighed on financial markets in recent months amid fears of spillover effects around the world.

Beijing has repeatedly sought to reassure investors, but has yet to say how it plans to stabilize Evergrande in particular, which last week was deemed in “narrow default” by Fitch Ratings after missing coupon payments. valued at $ 82.5 million.

Representatives of public entities are now leading a newly created risk management committee in Evergrande and previous findings by authorities show that Evergrande’s liquidity crisis is more complicated than expected, one of the sources said.

“Currently, there is no rush to introduce divestiture plans,” said a source close to regulators, referring to a possible divestiture of companies ranging from a property management unit to a branch of manufacture of electric vehicles.

Evergrande declined to comment, while Hui and the Guangdong provincial government could not be reached for comment.

Hui, 63, who is the founder of the property developer and currently owns around 60% of the capital, has freed up funds by selling luxury assets including three high-end houses, art and calligraphy.

Forbes magazine estimated in September that Hui had earned $ 8 billion in cash dividends since Evergrande entered the market in 2009, although the current value of his personal fortune is not known.

ASSET SALES

Evergrande’s missed payments on some of its offshore bonds threaten to trigger a cross-default on its some $ 19 billion in international bonds.

Evergrande has yet to comment on the missed payments, but said it plans to move forward with restructuring its offshore debt, which will be China’s largest.

The second source said that even if local governments intervene, they will only buy part of the capital of Evergrande assets. Authorities will not allow Evergrande to intentionally default on its loans, the source added.

Beijing has prompted state-owned companies and state-backed real estate developers to buy some of Evergrande’s assets, Reuters previously reported.

China’s Central Economic Labor Conference said last week that companies should make self-rescue arrangements, while regulators and local governments should make plans to manage and mitigate financial risks.

(Reporting by Jing Xu and Clare Jim; editing by Sumeet Chatterjee and Jason Neely)

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