China Evergrande Asks for Reprieve After Wuhan Govt Seizes 11 Sites

Embattled developer China Evergrande is seeking a review of a decision by Wuhan officials to reclaim from the developer 11 plots of land designated for a tourism-focused residential project.

The 11 undeveloped parcels taken back by the government have a net land area of 2,071.3 mu, or just over 1.38 million square metres (14.85 million square feet), Evergrande said Thursday in a filing with the Hong Kong stock exchange, with local authorities having offered no compensation for the seizure.

The administrative decision handed down on 16 November relates only to the 11 parcels specified and does not involve 13 other land plots in the Evergrande Wuhan Technology Tourism City Project, which measures 5,065.8 mu in total, according to the Shenzhen-based builder.

“The company is communicating with the People’s Government of Jiangxia District, Wuhan City and will file an administrative review on this matter to protect the legitimate rights and interests of the company,” chairman Xu Jiayin said in Thursday’s filing.

Construction Proceeding

Evergrande acquired the project in Hubei’s provincial capital in December 2017 for RMB 5.6 billion (now $780 million) and commenced construction in March 2018.

The developer said work has begun on 1.26 million square metres, out of which 649,000 square metres (5,330 units) has been sold, 360,000 square metres (2,654 units) has been delivered and 289,000 square metres (2,676 units) has yet to be delivered.

There are currently 12 batches of pre-sold units, of which 10 have resumed normal construction and two are in the process of resuming construction, according to the filing.

In keeping with the project’s theme, Evergrande has invested RMB 2.1 billion in the construction of cultural tourism facilities spanning 242,000 square metres, including a hot-spring centre, hotels, a children’s amusement park and shopping streets.

“The external facade of most of the individual buildings has been completed, and the interior decoration of some individual buildings has basically been completed,” Evergrande said.

Debt Workout Whispers

To ease the restructuring of its $22.7 billion worth of offshore debt, Evergrande has been taking stock of its onshore assets for use as potential sweeteners to win over offshore creditors, Reuters reported this month.

The developer has informed offshore creditors that it plans to present a long-awaited restructuring proposal as soon as the first week of December, according to sources who spoke to Bloomberg this week. The plan could include swapping debt for shares in Evergrande’s Hong Kong-listed automotive and property management units, the Bloomberg report said.

The group of creditors asked Xu to infuse at least $2 billion of his personal wealth into Evergrande as a condition for agreeing to any proposals from the company, the sources told Bloomberg.