State to help Evergrande as Hui reveals June EV date

China Evergrande (3333) plans to bring in state-owned Guangzhou City Construction Investment as a guarantor to restructure 3.25 billion yuan (HK$3.69 billion) worth of debts, sources said, as the embattled developer held an investor call yesterday night in the absence of chairman Hui Ka-yan.

However, Hui was at another meeting last night where he said that Evergrande's electric vechile unit will achieve mass production of its Hengchi 5 SUV by June 22, mainland media reported.

The restructure deal centres around a 3.25 billion yuan trust loan that Citic Trust issued to Evergrande using funds raised from investors, according to the sources and a document reviewed by Reuters partially outlining the plan.

Under the loan resolution, Citic will return the land used as collateral to Evergrande, the world's most indebted property developer, who will then pass it on to the Guangzhou city government to put up for sale, the sources said.

Guangzhou City Construction Investment will act as a guarantor of the loan and Citic will repay the principal amount to its investors within two years using funds from the Guangzhou city government, the sources said.

This came after Evergrande's property service unit said around 13.4 billion yuan of its bank deposits as security for third party guarantees had been enforced by the relevant banks.

Evergrande Property Services Group (6666) said it will set up an independent investigation committee to investigate the pledge guarantees.

The unusual development, which the unit said it discovered while preparing its annual report, may heighten scrutiny of corporate governance at the real estate empire founded by billionaire Hui. While Evergrande's main property business has been in financial distress for months, the services unit has long been considered among the stronger parts of Hui's company.

In a separate statement, Evergrande said it considers the matter to be a "major incident" and will assess the implications.

Evergrande and its financial advisers held an investor call Tuesday after it announced a likely delay in audited 2021 results and had trading halted in its shares and onshore bonds.

Evergrande said yesterday it would not be able to publish its financial results for last year by March 31 as the audit work has not been completed.