Li flagship joins Evergrande tower chase

Struggling developer China Evergrande is selling its Hong Kong headquarters via a tendering process that ended yesterday, a source with direct knowledge said, as CK Asset, founded by billionaire Li Ka-shing and chaired by his elder son Victor Li Tzar-kuoi confirmed it has lodged a bid for it.

With more than US$300 billion (HK$2.34 trillion) in liabilities, Evergrande has been trying to sell its 26-story China Evergrande Centre in Wan Chai after a potential US$1.7 billion deal collapsed late last year as part of an asset-disposal effort to raise fund.

The sale proceeds of the Hong Kong tower would be used to repay offshore creditors as part of the debt restructuring plan that is expected to be announced this week, sources have said.

While several Hong Kong developers have submitted tenders, the source told Reuters, Hang Lung Properties hinted yesterday it had not submitted a bid and would not comment.

There was little participation from mainland state-owned players, the source said.

Evergrande recently appointed real estate services group Cushman & Wakefield as the sole agent to sell the 345,000 square foot office building, the Financial Times reported yesterday, citing sources, and the sale was expected to fetch a much lower figure this time, closer to HK$9 billion. Cushman & Wakefield and Evergrande refused to comment.

Reuters cited sources as saying in October that state-owned Yuexiu Property pulled out of a proposed US$1.7 billion deal to buy the building over worries about the developer's dire financial situation.

Evergrande bought the harborside building from local peer Chinese Estates Holdings for HK$12.5 billion in 2015.

That deal set a record for a single transaction of a commercial building in the Asian financial hub with the highest price per square foot at the time. It also made the property Evergrande's single largest asset in the city.

Evergrande is looking to raise cash ahead of a restructuring that could be announced as soon as this week, which will not only determine its future but also indicate how Beijing plans to overcome a deepening property sector crisis.

The developer said last Friday its chief executive, Xia Haijun, was forced to resign amid a company probe into how 13.4 billion yuan (HK$15.6 billion) of deposits were used as security for third parties to obtain bank loans, which some borrowers then failed to pay back.

Chief financial officer Pan Darong was also made to step down.