3 yıl önce

China's govt summons Evergrande founder after insufficient funds warning

Evergrande, which is drowning in a debt of $300B, said there was "no guarantee" it would have enough funds to meet debt repayments.

AP

Evergrande, which is China's second-largest developer by volume, has so far managed to avoid default but challenges remain.

The Chinese government has summoned the embattled founder of real estate firm Evergrande, after the group issued a statement warning it might not have sufficient funds to continue to meet its financial obligations.

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".

China Evergrande, which is drowning in a sea of debt worth $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.

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 $82.5 million in total due Monday, when the grace period ends, Bloomberg reported this week.

Beijing urges founder to cash in personal wealth

Last Friday, founder Xu – also known as Hui Ka Yan in Cantonese – sold 1.2 billion Evergrande shares for the equivalent of $344 million, cutting down his stake in the firm to 68 percent from 77 percent.

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 ($188.4 million), and is in active talks with buyers to potentially dispose of some assets.

"The risks of Evergrande Group are mainly due to its own poor management and blind expansion," China's central bank said in a statement Friday.

"The short-term risks of individual real estate companies will not affect liquidity in the medium and long-term market," it added.

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.