Chinese govt summons Evergrande founder after warning on funds | Malay Mail
BEIJING, Dec 3 — The Chinese government summoned the embattled founder of real estate firm Evergrande today, after the group issued a statement warning it might not have sufficient funds to continue to meet its financial obligations. China Evergrande , which is drowning in a sea of debt worth...
channel for the latest updates.BEIJING, Dec 3 — The Chinese government summoned the embattled founder of real estate firm Evergrande today, after the group issued a statement warning it might not have sufficient funds to continue to meet its financial obligations.
China Evergrande, which is drowning in a sea of debt worth US$300 billion, has been struggling to meet its commitments and the firm’s woes have fanned concerns about the whole property sector, which makes up a substantial part of the world’s number two economy.
On Friday evening, Evergrande in a filing with the Hong Kong stock exchange warned that in light of its current liquidity situation, there is “no guarantee that the Group will have sufficient funds to continue to perform its financial obligations”.In a follow-up statement hours later the provincial government in Guangdong said it had “immediately summoned (founder) Xu Jianyin and... agreed to send a working group to Evergrande Real Estate Group to supervise and promote enterprise risk management”. headtopics.com
The company is one of several real estate firms that have plunged into crisis over the past year after Beijing embarked on a regulatory drive to curb speculation and leverage, cutting off a crucial avenue for accessing cash.Evergrande, which is China’s second-largest developer by volume, has so far managed to avoid default but challenges remain.
An Evergrande unit has bond coupons worth US$82.5 million in total due Monday, when the grace period ends, Bloomberg reported this week.Last Friday, founder Xu — also known as Hui Ka Yan in Cantonese — sold 1.2 billion Evergrande shares for the equivalent of US$344 million, cutting down his stake in the firm to 68 per cent from 77 per cent.
Beijing regulators have urged the tycoon to use his personal wealth to finance Evergrande’s debt struggles.The same day, its auto unit said that it had returned undeveloped land worth some 1.2 billion yuan (US$188.4 million), and is in active talks with buyers to potentially dispose of some assets.
‘Blind expansion’The property sector –- a key growth engine in China -– has cooled in recent months with stricter home buying rules and the liquidity crisis affecting some of the country’s largest developers.“The risks of Evergrande Group are mainly due to its own poor management and blind expansion,” China’s central bank said in a statement today. headtopics.com
“The short-term risks of individual real estate companies will not affect liquidity in the medium and long-term market,” it added.Another Chinese developer, Kaisa Group, is also facing default after saying Friday it had failed in a bid for a debt swap that would buy it crucial time.
Kaisa last month announced a plan to delay the repayment timeline for some of its bonds, offering an exchange for at least US$380 million of notes, which would give it some room to find money further down the line.But the offer failed to win the 95 per cent approval from bondholders needed for the plan to go ahead.
In a statement on Friday, the firm said it will explore solutions “including but not limited to renewal and extension of borrowings and disposing of assets”.But “there is no guarantee” it would be able to meet its repayment obligations under the existing notes at maturity. It added that it has US$400 million of dollar notes maturing on Tuesday.
Failing to repay the principal on the notes will be considered a default, and risks triggering cross default on its other debt.With Chinese developers struggling to meet their debt obligations, Beijing has shown some signs of stepping back from its tough line on the mammoth property industry. headtopics.com
Last month, the southwestern city of Chengdu also announced measures to make it easier for companies to sell properties, making it the first to loosen restrictions on the embattled sector. — AFPRead more: Malay Mail »
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