Chinese real estate giant Evergrande ousts top executives
Struggling Chinese real estate giant Evergrande has ousted its CEO and CFO after an internal probe into why banks seized more than $2 billion from the company’s property services arm, the company said. society.
The resignations come as Evergrande fights for its survival and strives to reach a restructuring agreement with its debtors, to whom it owes around $300 billion.
The executives were forced to resign on Friday following an internal probe into why banks unexpectedly seized 13.4 billion yuan ($2 billion) in deposits from its real estate services unit, Evergrande Property Services.
Investigators have determined that the money was seized because it was used as collateral for a “third party” to obtain a loan, according to a statement from the company released late Friday evening.
The funds obtained through this loan were then “redirected to the Group via third parties and were used for … general operations”, he added.
“In view of this, the board has decided to request” the resignation of the relevant executives, including CEO Xia Haijun and CFO Pan Darong, according to the statement posted on the Hong Kong Stock Exchange’s website, where the company is listed.
An executive director, Siu Shawn, was named CEO.
Once a leader in China’s property sector, Evergrande has struggled in recent months to shed its assets as Chairman Hui Ka Yan has paid off some of its debts using his own personal wealth.
Evergrande’s woes have reverberated across China’s real estate sector, with some smaller companies also defaulting on payments and others struggling to find enough cash.
Long heavily dependent on loans to finance their massive developments, Chinese property companies have found themselves struggling as Beijing’s efforts to reign in debt have reduced cash flow.