Xu Jiayin, chairman of Chinese developer Evergrande, resigns
The billionaire founder of Evergrande, China’s most indebted real estate developer, has resigned as chairman of the company’s main real estate arm, Hengda Real Estate Group, according to a notice filed on a government website Tuesday.
The news that Xu Jiayin, the chairman, would be replaced by Zhao Changlong, a former director of the company who will take over the general management of the real estate branch, caused the promoter’s shares to fall by more than 4%.
Details of the leadership change at Hengda Real Estate Group were posted on the National Enterprise Credit Information System, a government business information site. A spokesperson for Evergrande said the announcement would not lead to any change in the management structure of the company. The person did not specify exactly how Mr. Xu’s role in Evergrande was affected.
Evergrande is the latest Chinese giant to come under the microscope of regulators seeking to curb unruly corporate debt. One of the most indebted companies in the country, it has up to $ 300 billion in unpaid bills, loans and bond payments.
Evergrande cranes dot the Chinese cityscape. During the country’s boom years, this helped create the kind of economic activity that officials had to depend on to fuel the country’s miraculous growth. She sold apartments before they were built, using a model that allowed her to expand rapidly as the country urbanized. Then he borrowed money to start new ventures, like an unprofitable football club and an electric vehicle business.
Fearing that a housing bubble could lead to a crisis that would spill over into China’s financial system, regulators began cracking down on the housing sector’s borrowing habits last year. The central bank created new rules called the “three red lines” that forced real estate companies to start paying their bills. Evergrande was the main target.
Evergrande sold parts of his empire to comply. Earlier this month, she sold stakes in her internet business. Mr. Xu told investors that the company is working hard to pay off some of its loans and has reduced the interest-bearing debt to $ 88 billion from $ 130 billion last year.
Tuesday’s leadership changes could portend further turmoil.
Evergrande last week confirmed reports that it was in talks with potential buyers to sell its electric vehicle business and property management unit without giving further details.