Evergrande has been Ordered to Demolish 39 Buildings

Evergrande is trying to reassure investors about the impact of an official order to demolish a few dozen buildings in China. Chinese media reported over the weekend that authorities in Hainan province, a tropical resort island off the coast of southern China, had ordered Evergrande to demolish 39 buildings, saying that the building permits had been illegally obtained.

The company acknowledged the order in a post on WeChat on Monday night but added that it did not affect other buildings in the same property project, which involved some 61,000 property owners. The 39 buildings are part of Evergrande gigantic Ocean Flower Island project in Hainan, in which the company has invested nearly $13 billion over the last six years.

The company suspended trading in its shares in Hong Kong on Monday. In a filing with the Hong Kong Stock Exchange on Tuesday, the company said it would resume trading and confirmed that it would actively communicate with authorities about the Ocean Flower Island project and “resolve the issue properly. Shares surged as much as 10% after trading started in early afternoon, before paring gains. They were last up 1.3%.

Evergrande, China’s second-largest property developer by sales in 2020, is reeling under more than $300 billion of total liabilities. It has been scrambling for months to raise cash to repay lenders, and the company chairman Xu Jiayin has been reportedly selling off personal assets to prop up its finances. But that doesn’t seem enough to avoid default.