Struggling developer China Evergrande Group said on Sunday, July 31, 2022, that one of its subsidiaries, Evergrande Group (Nanchang) Co, Ltd, had been ordered to pay a guarantor 7.3 billion yuan ($1.08 billion) for failing to honor its debt obligations, Farah Master reported for Reuters.
Photo Insert: China Evergrande Centre, Hong Kong
In July 2021, the guarantor, who was not named in the statement, provided a guarantee for the borrowings of certain entities controlled by Evergrande, the company said in a statement to the Hong Kong stock exchange.
Nanchang provided counter-guarantees in the form of a pledge of a total of 1.3 billion shares that it held in Shengjing Bank Co., Ltd.
"As the borrowers failed to repay the loans, the applicant carried out its obligations under the guarantee and claimed against the subsidiary under the pledge," Evergrande said in a statement.
The ruling "is that the guarantor has the priority to receive compensation from the sale of the shares" and the "scope covers the amount paid by the applicant (7.3 billion yuan.)"
Evergrande has said it was selling its Hong Kong headquarters via tendering process, a source with direct knowledge told Reuters on Thursday.