China’s Guangdong summons Evergrande boss after debt repayment warning

“There is no guarantee that the group will have sufficient funds to continue to meet its financial obligations,” the China Evergrande Group said, prompting regulators to give assurances that the risks to the whole sector could be contained

BEIJING, China — China’s Guangdong province summoned the chairman of the China Evergrande Group on Friday, Dec. 3, after the property developer said there was “no guarantee” it would have enough funds to meet the debt repayments, while regulators sought to reassure the markets.

Evergrande, once China’s top-selling developer, is saddled with more than $300 billion in debt, fueling fears of a potential collapse that could send shockwaves through the country’s property sector and beyond.

The company said in a Hong Kong stock exchange filing on Friday that it had received a request from creditors to pay around $260 million. It is already behind in paying $82.5 million in coupons due Nov. 6.

“Given the current state of liquidity … there can be no assurance that the group will have sufficient funds to continue to meet its financial obligations,” Evergrande said, adding that creditors may demand accelerated repayment if it does not. didn’t.

This prompted the government of Guangdong, where the company is based, to summon Evergrande chairman Hui Ka Yan.

The provincial government said in a statement that it would send – at Evergrande’s request – a task force to the company to oversee risk management, strengthen internal controls and maintain normal operations.

Guangdong authorities were not the only government entity to look into the Evergrande issue on Friday.

In a series of seemingly coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risk to the broader real estate sector could to be contained.

“Evergrande’s problem has been mainly caused by its own mismanagement and skyrocketing expansion,” the People’s Bank of China said.

Short-term risks caused by a single real estate company will not affect fundraising in the market in the medium to long term, he said, adding that housing sales, land purchases and financing “have already returned to normal in China”.

The China Banking and Insurance Regulatory Commission said the Evergrande issue would not affect normal industry operations and would increase support for guaranteed rental housing.

He added that he believed regulators at home and abroad would deal fairly with Evergrande-related issues, while China’s Securities Regulatory Commission said any fallout for the capital market was “controllable” and would maintain. its support for the financing needs of property developers.

In its filing, Evergrande said it intended to actively engage with creditors to come up with a “workable restructuring plan” to deal with its offshore debts. – Rappler.com

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