By PR Venkat
China Evergrande Group said receivers sold undeveloped land in Hong Kong for $636.94 million, which will be used to reduce the property developer’s huge debt.
The sale of the land in Yuen, a district near the border with the city of Shenzhen in southern mainland China, will result in a loss of about 770 million dollars, Evergrande said Sunday.
Evergrande had in January this year said receivers had been appointed for the land it used as collateral for a $250million loan.
A person familiar with the matter had said the creditor was Los Angeles-based troubled debt manager Oaktree Capital Management LP, which used the land as collateral for a loan it made to Evergrande.
Since Oaktree had lent on a secured basis, it controls the collateral in the event of default and is able to appoint a receiver to sell the asset and collect what is owed to it.
Last week, the company said it received execution notices for a loan of more than $4.0 billion from Shengjing Bank Co.
Evergrande’s financial problems are not only hurting China’s real estate sector, but also having a wider ripple effect on allied sectors.
Companies in sectors such as construction services and building materials such as steel and paint absorbed large losses due to Evergrande’s inability to pay its bills. Some of them have laid off workers and delayed paying their own bills to other companies, which are also suffering.
Write to PR Venkat at [email protected]