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As Evergrande is mired in a debt crisis, former "allies" have parted ways.

Hong Kong listed company Zhongyu Group announced that it had sold 32.18 million Evergrande shares through the open market on October 5 at an average price of HK $3.89 per share for a total consideration of HK $125 million (excluding transaction costs).

In response to the reasons for the sale of Evergrande shares, Zhongyu Group said that it is concerned about the recent negative news of Evergrande and Evergrande Group, as well as the sharp decline in Evergrande's share price in the past few months. taking into account the recent fluctuations in the stock market, changing market and economic conditions, the directors believe that the sale can reduce the losses of Zhongyu Group and consolidate its financial and cash position. And reallocate its financial resources to other business needs.

In addition to China reputation Group, Yima International, a Hong Kong-listed company, announced that its indirect subsidiaries cleared 3 million Evergrande shares on the open market at an average price of HK $3.84 per share for a total consideration of about HK $11.52 million (excluding transaction costs). After the completion of the sale, the company did not hold any shares in Evergrande.

On September 24, Evergrande issued an announcement saying: "in the face of a serious shortage of funds." In view of the liquidity pressure, the Group has suspended some of its daily expenses and related suppliers have suspended supply. In view of the above difficulties, challenges and uncertainties in improving liquidity, the Group cannot guarantee that it will continue to meet its financial obligations under the relevant contracts. " As of the date of announcement, the Group has not made significant progress in resuming work for some projects.

Evergrande said that Evergrande is still in contact with different potential strategic investors to introduce new investors, but as of the announcement date is still in the process of due diligence and negotiation. At the same time, Evergrande is also actively discussing with potential investors the sale of some of its health valley projects and overseas assets to enhance overall efficiency and replenish working capital. Evergrande said that if no progress is made in the introduction of the above strategic investment or the sale of potential assets in the short term, it will lead to a lack of further financial investment in the company, which is expected to affect the daily operation of the company. as a result, the payment of wages or other expenses of the company's employees will continue to worsen, while affecting the progress of research and development of new energy vehicles, which will have a significant negative impact on the company's mass production of new energy vehicles.

At a time when Evergrande is mired in a debt crisis, Evergrande's mass production is full of uncertainties. According to media reports, many employees of Evergrande will take a paid rotation after the National Day. A number of Evergrande employees said their department would continue to take leave until the end of October after notifying the National Day. In addition, R & D personnel who have nothing to do with Hengchi 5 and Hengchi 6 cars, most of the production staff from Shanghai and Guangzhou Nansha manufacturing base will take part in the rotation. It is understood that although Evergrande is notified as a "paid vacation", a number of employees said that the salary structure of the labor contract signed with Evergrande consists of basic salary plus performance, with half on the 5th and 20th of each month. The minimum payment standard for "paid" is actually half salary.

Now Evergrande Group's high-quality assets are mainly Evergrande property and Evergrande Automobile, both of which plan to sell some of their interests. On October 4, China Evergrande, Evergrande property and Hesheng Chuangchuang all suspended trading pending a major announcement. A person familiar with the matter told the Financial Associated Press that Evergrande Group may make progress in the sale of Evergrande property. China Evergrande and the Xu Jiayin family hold a combined 60% stake in Evergrande property, which is expected to sell most of the officials and retain only a small number of interests. Hesheng, a Hong Kong-listed company, plans to acquire about 51 per cent of Evergrande property, taking control of Evergrande property and valuing it at more than HK $40 billion, according to media reports. It is understood that Evergrande property was listed on the Hong Kong Stock Exchange at the end of December 2020. Less than a year after listing, the sale of controlling shares requires the consent of the Hong Kong Stock Exchange, and the transfer of the shares is subject to the consent of the Hong Kong Stock Exchange.

Before the suspension, Evergrande property was at HK $5.12 per share, with a total market capitalization of HK $55.35 billion, while China Evergrande was at HK $2.95 per share, with a total market capitalization of HK $39.09 billion.

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