China Evergrande Group’s EGRNF -4.11% chief executive sold his holdings of company dollar bonds with a face value of $128 million last summer, stock exchange-filings showed, with the sales coming a few weeks before the property developer issued a profit warning.
Evergrande CEO Xia Haijun, and Hui Ka Yan, the group’s founder and chairman, have in recent years bought sizable quantities of new bonds from the company, according to company statements and to earlier filings disclosing changes to their holdings. Some of the bond-buying was presented as a public show of support when the Chinese real-estate giant was conducting multibillion-dollar debt issues.
Mr. Xia sold all of his holdings in three dollar notes issued by either Evergrande or its Scenery Journey Ltd. unit in a series of transactions between July 27 and Aug. 17 of last year, according to the exchange filings on Wednesday.
The notes were sold at between about 36 cents and 52 cents on the dollar, the filings showed. Evergrande’s bonds have since fallen further in price. One of the bonds that Mr. Xia had invested in, which is due in 2022, was recently quoted at 10 cents on the dollar, Refinitiv data shows.
It couldn’t be determined why the disclosure was made several months after the sales. The Hong Kong Securities and Futures Commission generally requires directors of public companies to file notices about “relevant events,” including a purchase or sale of their companies’ bonds, within three business days.
Evergrande didn’t respond to requests for comment.
Investor confidence in Evergrande was already waning by July 2021, but its problems intensified in late August. Company executives were summoned to a meeting with Chinese financial regulators on Aug. 19, and Evergrande issued a profit warning on Aug. 25.
The company has since defaulted on its international debts and is working with government representatives and advisers on a restructuring. Late last month, the developer asked offshore investors to give it more time to figure out its complicated financial situation and avoid drastic legal actions.
China Evergrande properties in Danzhou, Hainan province, China.
Photo: ALY SONG/REUTERS
Mr. Xia’s holdings were of bonds issued in 2017 and in 2020, the filings showed. His dealings in Evergrande’s debt were comparatively modest set against those of Mr. Hui, who was once ranked as China’s richest man and who retains a majority stake in the company.
In contrast, the CEO holds about 0.26% of Evergrande’s shares, and his total compensation for 2020 was about 205 million yuan, the equivalent of $32 million.
Chairman Hui bought $1 billion of Evergrande bonds in a late 2018 deal, and $650 million of debt issued in January 2020. The purchases by both executives in 2020 reflected their “support to and confidence in Evergrande,” the property developer said at the time.
Mr. Hui sold the bonds he bought in 2018 early the following year. He hasn’t disclosed any sale of notes purchased in January 2020.
In November, he sold some of his Evergrande shares, raising the equivalent of $343 million. The following month, disclosures showed that his stake fell further due to sales in which “shares were sold by the security holder who enforced the security.” After those transactions, Mr. Hui’s stake totaled about 59.8%, filings showed.
Write to Rebecca Feng at [email protected]
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