Global financial crisis fears as Chinese giant Evergrande unable to meet £196m repayment

express– In a filing to the Hong Kong stock exchange today Evergrande warned: “In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations.” It further warned that if it was unable to meet its obligations it may lead to other creditors demanding an acceleration of repayments. In response to the statement, the government of China’s Guangdong province have summoned Evergrande chair Hui Ka Yan. Reuter’s reports the Guangdong government will, at Evergrande’s request, send a working group to oversee the company’s management and operations.

Evergrande said it is currently assessing its overall financial condition and engaging with offshore creditors to try to create a viable restructuring plan.

Evergrande is thought to owe around $19bn (£14.07bn) to international investors.

One investor, Deutsche Markt Screening Agentur (DMSA), previously told they had not received payment on their bond by the end of its grace period along with two other creditors.

DMSA senior analyst Dr Marco Metzler confirmed today payment had still not been received with the company now preparing an insolvency petition against Evergrande Group, expected to file early next week.

Once a powerhouse of China’s property boom Evergrande has now become the most indebted property company in the world with total debts of around $300bn (£226.93bn).

There have been major concerns the collapse of Evergrande could send shockwaves around global markets with US central bank the Federal Reserve warning the strain of China’s ailing property sector could pose problems for global growth.

Property accounts for nearly a third of China’s GDP however the sector has struggled in recent years due to a crackdown in Government regulation and a growing debt crisis amongst many companies.

A further blow to Evergrande came recently when authorities were forced to take over its Guangzhou Football Stadium, currently under construction.

The Chinese government will now try to sell the stadium or transfer ownership to state firm Guangzhou City Construction Investment Group.

Evergrande has been desperatly selling off assets in a bid to raise cash to meet its debt obligations.

Last month it sold its entire stake in Chinese streaming company HangTen for $273m (£200m).

Billionaire chair of Evergrande Hui Ka Yan has also sold nine percent of his shares in Evergrande.

Hui has been under pressure from Beijing to use his own personal wealth to help pay Evergrande’s creditors and he is also believed to have sold off luxury assets including art, calligraphy and several homes.

Evergrande has been stumbling between payment deadlines on interest on its various bonds over the past few months.

In several cases it has missed these triggering 30 day grace periods which it has tried to narrowly make.

Its next grace period expires on the 6th December.

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