Point Piper's Evergrande billionaire Xu Jiayin secures fresh credit
Chinese banks have extended US$16 billion (A$21 billion) in credit lines to shore up the Evergrande Real Estate Group, which is controlled by the billionaire Xu Jiayin, the controversial $39 million Point Piper trophy home buyer,The New York Times reports.
Evergrande announced that since February, it had secured new credit lines totaling 100 billion renminbi, or US$16.2 billion (A$21.24 billion).
It included a new, 30 billion renminbi (A$6.3 billion) commitment on Monday from the Bank of China, which regards the developer as "its most important bank-wide long-term partner," Evergrande said in a news release.
Evergrande is one of China's biggest developers, with sales last year of more than 130 billion renminbi (A$27.27 billion). But it is also one of the most indebted, borrowing heavily from foreign investors in the United States dollar offshore market — debts that become more expensive to repay as the renminbi weakens.
Evergrande had total borrowings of 151.8 billion renminbi (A$31.83 billion) at the end of June, the most recent figures available. But that figure did not include an additional 44.5 billion renminbi (A$9.33 billion) worth of perpetual bonds, so called because they have no fixed repayment date, which the company carries on its books as equity.
Evergrande was founded in 1996 by Xu, now its chairman and majority shareholder, who the New York Times noted had a run-in with the Australian government when the Australian treasurer, Joe Hockey, ordered the company to sell his $39 million mansion, Villa del Mare (pictured above).
Property Observer notes the Villa del Mare title, held by Golden Fast Foods, holds no declared borrowings against on title or with its ASIC registered company.
Macquarie Wealth Research recently noted Evergrande had posted weak sales recently.
But the board of directors informed shareholders the group is expected to record an increase in the Group’s net profit in the range of between 25% and 35% for the year ended 31 December 2014, as compared with the previous year.
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Source: Macquarie Wealth