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China Evergrande faces winding-up lawsuit in Hong Kong

Published 06/27/2022, 02:12 AM
Updated 06/27/2022, 07:31 AM
© Reuters. FILE PHOTO: The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

By Clare Jim

HONG KONG (Reuters) -An investor in China Evergrande Group unit Fangchebao said on Monday it had filed a winding-up petition against the embattled property developer in Hong Kong because it had not honoured an agreement to repurchase shares the investor bought in FCB.

It is the first winding-up petition known to have been filed against Evergrande, which is reeling under more than $300 billion in liabilities and whose offshore debt was deemed to be in default after missing payment obligations late last year.

Investment holding firm Top Shine Global Ltd bought 0.46% of FCB, a Chinese online real estate and automobile marketplace, last March for HK$750 million ($95.6 million), as Evergrande sold 10% of the unit to 17 investors for a total $2.10 billion ahead of an initial public offering (IPO).

A Top Shine executive told Reuters that according to the agreement, if an IPO did not materialize by April 8 this year, Evergrande would have to repurchase the shares with a 15% premium.

In its petition, Top Shine has asked Evergrande to honour its agreement to repurchase the shares, the executive said, without giving further details. The executive declined to be named due to the sensitivity of the matter.

Evergrande did not immediately respond to a request for comment on the petition.

Hong Kong High Court records showed the petition was filed by Top Shine Global Limited of Intershore Consult (Samoa) Limited on Friday, and a hearing will be held on Aug. 31, according to the judiciary's website.

The executive added the decision to file a lawsuit is independent from Evergrande's restructuring process, even though Top Shine is considered a creditor.

Top Shine's ultimate beneficial owner is Lin Ho Man, who has also invested another 0.46% in FCB via a different entity, Triumph Roc International Ltd, the filing last year showed.

State-owned enterprises have stepped in to help Evergrande with the debt restructuring process and have taken over some of its assets to quell market concern about a disorderly collapse.

© Reuters. FILE PHOTO: The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

The firm is expected to announce a preliminary restructuring plan by the end of July.

($1 = 7.8462 Hong Kong dollars)

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