Evergrande claims improved internal control system meets HKEX rules, one month before a delisting deadline
Published: Aug 22, 2023 01:59 PM Updated: Aug 22, 2023 01:53 PM
Evergrande Group Photo: CFP

Evergrande Group. In 2021, the heavily indebted Evergrande Group even defaulted on paying back its loans and bonds and other obligations. The problem has derived from the developer's high reliance on debt for business expansion. Other developers have faced similar difficulties in promoting home sales and raising money. Photo: VCG

With only a month to go before a delisting deadline set by the Hong Kong Stock Exchange (HKEX), debt-ridden real estate developer Evergrande Group on Monday issued a note of internal control assessment, concluding that the company's "internal control system and process have been basically improved" and that internal control system is "sufficient to fulfill HKEX's re-listing" rules.

HKEX on August 30, 2022 issued additional re-listing stipulations to Evergrande, requiring the company to conduct an independent internal review to prove that Evergrande has adequate internal controls and procedures in place to meet its responsibilities.

The developer has implemented a set of recommended rectification measures in the review by RSM Nelson Wheeler Consulting and Crowe (HK) Risk Advisory, Evergrande said on Monday.

According to the Evergrande statement, RSM believes that as of the date of the internal control review report, within the scope of its assessment work, Evergrande's internal control system and processes "are designed and operating with effectiveness," and the relevant internal risks are managed at a reasonable level.

Meanwhile, Evergrande board of directors also believes the company has improved its internal control system, which the board thinks is sufficient for fulfilling the company's obligations under the listing rules.

On Friday, Evergrande said in another statement that the company is pushing forward its offshore debt restructuring as planned. The application is a normal procedure for the offshore debt restructuring and does not involve bankruptcy petition.

By December 31, 2022, unpaid principal and interest by the developer amounted to approximately 34 billion yuan ($4.67 billion).

China Evergrande Group, together with Evergrande Property Services Group and China Evergrande New-Energy Vehicle Group (Evergrande Vehicle), were ordered to cease trading on the HKEX from March 21, 2022.

On July 28, Evergrande Vehicle resumed trading after a suspension of nearly 16 months.

On August 14, Evergrande said that it received a funding of $500 million from NWTN Inc. The funds will be used by Evergrande Vehicle's Tianjin Plant in the production of the Hengchi 5 electric vehicles.

Global Times