SEVERE WX : Flood Warning View Alerts

Chinese property giant Evergrande warns again that it could default on its enormous debts

Chinese property giant Evergrande warns again that it could default on its enormous debts

Posted: Sep 15, 2021 6:21 AM
Updated: Sep 15, 2021 6:21 AM

Evergrande is once again warning that it could default on its huge debts as it struggles to cut costs or find anyone to buy some of its assets.

The embattled Chinese property giant has already warned in recent weeks of its cash crisis, listing $300 billion in total liabilities and saying that it could default if it's unable to raise money quickly.

Should that happen, the effects would be felt across China's banking system and the wider economy. The group has already suspended work on some projects as it tries to conserve cash, a move that's poised to hit China's property sector.

Markets in the region shook on Tuesday. The Shanghai Composite closed down 1.4%, while Hong Kong's Hang Seng index fell 1.2%.

Evergrande disclosed on Tuesday that it had made "no material progress" in its search for investors to buy part of its stakes in its electric vehicle and property services businesses.

"If the group is unable to meet its guarantee obligation or to repay any debt when due or agree with the relevant creditors on extensions of such debts or alternative agreements, it may lead to cross-default," it said.

The company also announced in a stock exchange filing in Hong Kong that it had enlisted financial advisers to "evaluate the liquidity of the group and explore all feasible solutions" as quickly as possible. But the company cautioned that nothing was guaranteed.

The disclosure came hours after Evergrande, which is one of China's largest real estate developers, had sought to reassure the public about its business. In a statement Monday night, the Shenzhen-based conglomerate addressed "recent comments" on the internet, saying that any bankruptcy rumors "are completely untrue."

"The company has indeed encountered unprecedented difficulties at present, but it is determined to ... do everything possible to restore operations as usual, and protect the legitimate rights and interests of customers," it said in the Monday statement.

But on Tuesday, Evergrande acknowledged its difficulty in finding buyers for its assets, saying that "it is uncertain as to whether the group will be able to consummate any such sale."

Evergrande shares plunged almost 12% Tuesday to 2.97 Hong Kong dollars ($0.38), its lowest level since December 2014. The stock has shed 80% of its value this year.

The company also disclosed on Tuesday that the proposed sale of its office building in Hong Kong, a massive property in a major commercial district on Hong Kong Island "had not been completed within the expected timetable."

Evergrande agreed to purchase the tower for 12.5 billion Hong Kong dollars (about $1.6 billion) in 2015, according to a stock exchange filing by its former owner.

Evergrande's problems were underscored this week when protests reportedly broke out at its headquarters in Shenzhen.

Hundreds of investors showed up at Evergrande's offices on Sunday to demand a meeting with a company executive, according to Chinese news outlet Caixin. Reuters reported similar scenes on Monday, with about 100 protesters on scene.

Evergrande did not immediately respond to a request for further comment.

Analysts have suggested that the Chinese government would have to intervene to limit the fallout if Evergrande were to default. And authorities are clearly watching closely, while attempting to project calm.

On Wednesday, Fu Linghui, a spokesperson for China's National Bureau of Statistics, acknowledged the difficulties of "some large real estate companies," according to state news agency China News Service.

Without naming Evergrande directly, Fu was quoted as saying that China's real estate market had remained stable this year but the impact of recent events "on the development of the whole industry needs to be observed."

On Tuesday, Bloomberg cited anonymous sources as saying that regulators in Guangdong, Evergrande's home province, had enlisted international law firm King & Wood Mallesons, among other advisers, to examine the conglomerate's finances. A spokesperson for King & Wood Mallesons declined to comment.

According to the report, Guangdong officials have already rejected a bailout request from Evergrande founder Hui Ka Yan, once China's richest man. Guangdong authorities and Evergrande did not immediately respond to a request for comment.

"Evergrande's collapse would be the biggest test that China's financial system has faced in years," Mark Williams, Capital Economics' chief Asia economist, wrote in a note last week. He predicted that the country's central bank "would step in with liquidity support" if fears of a major default intensified.

Financial restructuring specialist Houlihan Lokey and Hong Kong-based Admiralty Harbour Capital are now serving as the firm's advisers.

— Julia Horowitz contributed to this report.

The-CNN-Wire
™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

West Lafayette
Partly Cloudy
44° wxIcon
Hi: 54° Lo: 45°
Feels Like: 42°
Kokomo
Cloudy
45° wxIcon
Hi: 56° Lo: 45°
Feels Like: 41°
Rensselaer
Cloudy
46° wxIcon
Hi: 51° Lo: 46°
Feels Like: 43°
Fowler
Cloudy
44° wxIcon
Hi: 53° Lo: 47°
Feels Like: 42°
Williamsport
Mostly Cloudy
47° wxIcon
Hi: 55° Lo: 47°
Feels Like: 43°
Crawfordsville
Cloudy
45° wxIcon
Hi: 57° Lo: 45°
Feels Like: 40°
Frankfort
Mostly Cloudy
45° wxIcon
Hi: 58° Lo: 46°
Feels Like: 40°
Delphi
Partly Cloudy
43° wxIcon
Hi: 56° Lo: 45°
Feels Like: 43°
Monticello
Partly Cloudy
43° wxIcon
Hi: 57° Lo: 46°
Feels Like: 43°
Logansport
Partly Cloudy
43° wxIcon
Hi: 53° Lo: 43°
Feels Like: °
Windy & Drying Out, But River & Creek Flooding...
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1007681

Reported Deaths: 16470
CountyCasesDeaths
Marion1355212121
Lake664101166
Allen57993801
Hamilton46350465
St. Joseph44397615
Elkhart35949510
Vanderburgh32251480
Tippecanoe27933260
Johnson25107445
Hendricks23897359
Porter22929365
Madison18748409
Clark18557252
Vigo17479303
Monroe15263200
LaPorte15173250
Delaware15073263
Howard14748290
Kosciusko12348148
Hancock11728176
Bartholomew11639180
Warrick11292189
Floyd11108215
Wayne10986253
Grant10082220
Morgan9472176
Boone8926115
Dubois8271131
Henry8229152
Dearborn822393
Noble8031106
Marshall7939135
Cass7546121
Lawrence7457171
Shelby7189119
Jackson698289
Gibson6597115
Harrison649192
Knox6421106
Huntington6395100
DeKalb632399
Montgomery6264111
Miami593398
Putnam581278
Clinton576171
Whitley565755
Steuben562576
Wabash5332104
Jasper532079
Jefferson511297
Ripley500586
Adams482576
Daviess4677114
Scott438974
Greene425196
Wells424888
Clay423360
White418764
Decatur4169102
Fayette406587
Jennings387361
Posey376644
Washington359151
LaGrange359078
Randolph3452100
Spencer340243
Fountain335760
Sullivan329452
Starke317171
Owen314771
Fulton312667
Orange293664
Jay284645
Franklin265643
Perry265452
Rush262432
Carroll261934
Vermillion258654
Parke231426
Pike229243
Tipton228159
Blackford193142
Pulaski183757
Crawford159823
Newton158348
Benton150617
Brown146747
Martin138719
Switzerland135011
Warren121116
Union107016
Ohio84613
Unassigned0540

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events