Hui Ka Yan is finally taking steps to reduce the massive debt pile at his property developer China Evergrande Group, but the costs of doing so are piling up rapidly.
in Shanghai, which was launched just last year. It hasn’t disclosed the size or timing of that planned offering, though.
Raising more cash is credit positive for the loss-making EV subsidiary, but it also sends a bad signal to equity investors, according to Warut Promboon, managing partner of Hong Kong-based research firm Bondcritic. Zhou Chuanyi, a Singapore-based analyst at research firm Lucror Analytics, says selling shares at the 20% discount means the company is needing cash badly. Hui has to boost the company’s cash holdings now, so he can pay down a portion of Evergrande’s hundreds of billions of dollars in debt.
Authorities at government departments including the People’s Bank of China have begun adhering to a “three red-lines”for property developers, which stipulates clear limits on debt-to-asset ratios as well as the ratio of short-term debt to cash and cash equivalents.
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