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Evergrande: Real estate company warns again of liquidity bottlenecks

2021-09-14T08:58:16.257Z


The real estate developer Evergrande is about to go bankrupt, the effects would be enormous. Investors and suppliers are in a mood of alarm. Customers fear that prepaid housing will never be built.


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Headquarters of real estate developer Evergrande in Hong Kong: protest from investors

Photo: TYRONE SIU / REUTERS

The Chinese real estate company Evergrande, which has run into financial difficulties, has admitted that it is under "enormous pressure".

In a notice to the Hong Kong Stock Exchange, the company said it had hired financial advisors to examine "all feasible solutions" to pay off the mountain of debt.

But there is no guarantee that Evergrande will be able to meet all of its financial obligations, the group warned.

The developer again warned of liquidity risks due to the decline in property sales.

The country's second largest real estate developer is in talks with potential investors to sell some of its assets, but has not made any "significant progress," the statement said.

The company holds "persistent negative media reports" responsible for the damage to investor confidence.

This leads to a further decline in sales in September.

The reports would have deterred potential buyers.

"Unprecedented Difficulties"

The company announced a few days ago that it was in "unprecedented trouble," but denied speculation about an impending bankruptcy. About two weeks ago, the over-indebted group itself warned of liquidity and default risks for the first time if it should not succeed in resuming construction, selling holdings and renewing loans.

In June, Evergrande defaulted on bond interest payments.

The lowering of the credit ratings by the rating agencies Moody's, Fitch and China Chengxin International (CCXI) had led to a sell-off on the bond and stock markets.

Investors fear a collapse of Evergrande will have a massive impact on the Chinese banking system.

However, bankruptcy would create enormous upheavals in the Chinese economy and endanger the politically desired social stability.

Protests from investors and business partners

Evergrande has accumulated more than € 260 billion in debt in years of aggressive expansion.

According to its own information, the group employs 200,000 people in the country.

More and more customers fear that the pre-paid apartments will never be built.

Suppliers and subcontractors have already complained about payment defaults.

The group is listed on the Hong Kong Stock Exchange.

Investors protested in front of the company's headquarters in Shenzhen in the south of the country on Monday.

Dozens of people also gathered there on Tuesday.

The protesters also included business partners to whom Evergrande owes money.

The police blocked access to the building.

Evergrande is not only active in the real estate industry - in 2019 the group founded the electric car manufacturer Evergrande Auto, which has not yet sold a single vehicle.

The company also invested in the tourism, internet, digital economy, insurance and amusement parks sectors.

He also owns the Guangzhou FC soccer club in Canton.

kig / mik / Reuters / AFP

Source: spiegel

All business articles on 2021-09-14

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