Evergrande executives forced to repay money after cashing out early

A group of six Evergrande executives have reportedly been disciplined after they cashed out early as the company faces collapse.

As Evergrande hurtles towards collapse, six high-ranking executives have been disciplined after it emerged they had cashed out early on the firm’s investment products.

The actions of the unnamed executives come as the company faces staggering debts of around $A408 billion, earning it the unwelcome title of the world’s most indebted real estate firm.

According to Reuters, the six executives redeemed wealth management products as retail investors were told by the company it could not repay the money they were owed.

But this weekend, Evergrande announced the group had since repaid the money they cashed out, with the statement claiming they had been punished and held accountable for the move.

However, further details of the executives, the products they cashed out and the nature of the punishment have not been revealed.

Evergrande’s potential collapse has devastated countless everyday investors. Picture: Noel Celis/AFP

In September, Evergrande had warned that “severe penalties” would follow.

The South China Morning Post revealed the executives in question had made early redemptions of 12 Evergrande wealth management products spanning from May 1 to September 7.

It comes as Evergrande was expected to miss yet another round of debt repayments worth a whopping $US148 million on Monday.

Fears of ‘contagion’ spread

In the early days of the Evergrande crisis, experts began expressing fears it could cause a “contagion” effect, with the disaster spilling over into other companies and industries.

And it didn’t take long for that to come to pass.

Last week, another Chinese property company, Fantasia, missed a payment on a $US206 million ($A282 million) bond that had matured, triggering a default.

It came as property management firm Country Garden Services Holdings said that a unit of Fantasia had missed repayment on a 700 million yuan ($A108 million) loan, saying it was likely the company would default.

In a stock exchange filing, the company said it was is now assessing “the potential impact on the financial condition and cash position of the group”.

Just weeks earlier, the firm had insisted it had “no liquidity issue”.

And in a third blow to China’s struggling real estate sector, another firm, Sinic Holdings, also defaulted on a debt interest repayment this week, with Fitch ratings downgrading Sinic as a result.

Yesterday, there was yet another clue that contagion was already in full swing, with Hong Kong-listed developer Modern Land (China) requesting a three-month extension on repayments on a $US250 million ($A340 million) bond, which comes due on October 25.

There are signs a contagion is already in full swing. Picture: Hector Retamal/AFP

In a filing to the Hong Kong stock exchange on Monday, the company said it wanted the deadline pushed back to allow it to “improve our liquidity and cashflow management and to avoid any potential payment default”.

It comes as the firm’s shares have almost halved in value in just six months, as cracks in China’s real estate industry increasingly begin to show.

Just last week, US Secretary of State Antony Blinken gave an alarming assessment of the Evergrande fiasco, warning the company’s downfall could affect “literally the entire world”.

In his provocative interview with Bloomberg Television, Mr Blinken issued a direct plea to Chinese authorities.

“China has to make sovereign economic decisions for itself, but we also know that what China does economically is going to have profound ramifications, profound effects, on literally the entire world because all of our economies are so intertwined,” Mr Blinken said.

“So certainly when it comes to something that could have a major impact on the Chinese economy, we look to China to act responsibly and to deal effectively with any challenges.”

Originally published as Evergrande executives forced to repay money after cashing out early