Pan Sutong has the distinction of being one of Hong Kong’s ten richest individuals, with an estimated net worth of $5.5 billion in 2018, according to Forbes Magazine. Now, however, he may face bankruptcy and the loss of his real estate empire. As Hong Kong reels from its biggest political protests in decades and the Chinese government struggles to find solutions to the financial crisis there, Pan Sutong faces major challenges in maintaining his business empire and providing a safety net for his family members and employees if it collapses.
How Did Pan Sutong Lose Millions?
The reason for his trouble? Bad debt. After investing in risky commercial property, which then suffered a decline in value, he had to offload some of his assets to reduce the debts and make payments on time. But with real estate prices still low, there wasn’t enough profit left over to keep the business afloat.
How Did He Lose Even More?
Pan has since tried to stop the bleeding by selling off some of his property holdings, but he is still reportedly saddled with too much debt. Analysts who spoke to The Wall Street Journal estimated that his debt load could be as high as $30 billion if you consider all the debt he’s taken on from a host of firms and other loans. And that figure doesn’t even include any borrowing from banks, which makes up over 50 percent of China’s corporate bond market. In recent years, banks have been expanding rapidly through aggressive lending practices (sometimes with less-than-cautious terms), which has seen some of the biggest names in China’s economy defaulting or coming close to it.
What Is The Current Situation?
Chinese billionaire Pan Sutong, who is also the chairman of LONKING Group and Tiens Group, China’s largest private conglomerate worth over $4 billion, is fighting to save his business from bankruptcy. His latest purchase was his best-known one: that of Waldorf Astoria New York for US$2.2 billion in October 2016. Mr. Pan planned on turning it into a 400-room luxury hotel within two years. Six months after the purchase and months after the close of an equity issuance (bringing in a total of $3 billion), he found himself needing an additional $500 million for the renovation project.
Who Are The People Affected By This?
Pan Sutong is the founder of Sunac, one of China’s biggest real estate developers. Pan was worth about $4 billion, but now he faces bankruptcy. The company’s shares have fallen 60% since the beginning of this year. Sunac raised $2 billion from investors to stabilize its finances earlier this year, but they might not be able to get another loan soon and are still facing pressure from rising interest rates. All in all, it seems that no matter how hard he tries, there are always too many hurdles for him to jump over. This means more people will lose their jobs and more debts will go unpaid as his financial security continues to fall apart.
How Will This Affect Hong Kong Moving Forward?
Pan Sutong is the billionaire chairman of one of Hong Kong’s most well-known property developers, Henderson Land Development. He made his fortune in 1990 with a meager 400,000 USD and has since branched out to construct shopping malls and office buildings. Now he is experiencing hard times, as he has been unable to successfully save his real estate empire from financial downturns. As Hong Kong citizens react to this news, many are considering the implications that it will have on both Pan’s company and Hong Kong as a whole. They believe that the developer will take out loans or sell off assets to repay creditors before finally submitting for bankruptcy proceedings later on in 2019.
