China’s Guangdong summons Evergrande boss following debt repayment warning

The company logo is seen at the headquarters of China Evergrande Group in Shenzhen, Guangdong Province, China September 26, 2021. REUTERS / Aly Song

BEIJING, December 3 (Reuters) – China’s Guangdong province summoned the chairman of China Evergrande Group (3333.HK) on Friday after the real estate developer said there was no guarantee it would have enough funds to repay debt. , while regulators sought to reassure markets.

Evergrande, once China’s best-selling developer, is struggling with more than $ 300 billion in liabilities, fueling fears of a potential collapse that could send shockwaves through the country’s real estate sector and beyond.

On Friday, the company said in a submission to the Hong Kong Stock Exchange that they had received a demand from creditors to pay around 260 million dollars. It is already late to pay 82.5 million dollars in coupons due on November 6. read more

“Given the current liquidity status … there is no guarantee that the group will have sufficient funds to continue to meet its financial obligations,” Evergrande said, adding that creditors can demand an accelerated repayment if it does not.

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

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

The Guangdong government was not the only state entity to wade into the Evergrande issue on Friday.

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

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

Short-term risks caused by a single real estate company will not undermine market collection in the medium and long term, it said, adding that home sales, land purchases and financing “have already normalized in China.”

The China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande issue would not affect the normal operation of the industry and would increase support for guaranteed rental housing.

It added that it believed domestic and foreign regulators would deal with Evergrande-related issues fairly, while the China Securities Regulatory Commission (CSRC) said any capital market fallout was “controllable” and would maintain support for real estate developers’ financing needs.

In its submission, Evergrande said they intended to actively engage with creditors to come up with a “viable restructuring plan” to deal with offshore debt.

Report from Beijing Newswroom and Arundhati Dutta in Bengaluru; additional reporting by Sumeet Chatterjee in Hong Kong; Author by Tom Daly; Edited by Sriraj Kalluvila, Louise Heavens and Emelia Sithole-Matarise

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