Evergrande shares tumble to record low 0:47
(CNN Business) ––
Evergrande, the troubled Chinese real estate company, is now trying to reassure investors about the impact of an order to demolish a few dozen buildings in China.
Media in China reported over the weekend that authorities in Hainan province - a tropical resort island off the coast of southern China - ordered Evergrande to demolish 39 buildings.
In that sense, they reported that the construction permits were obtained illegally.
Evergrande suspends trading of its shares in Hong Kong
The company acknowledged that order in a WeChat post Monday night.
But, he added, the measure does not affect other buildings on the same property project, which involves some 61,000 homeowners.
The 39 buildings are part of Evergrande's gigantic Ocean Flower Island project in Hainan.
A plan in which the company has invested almost US $ 13,000 million in the last six years.
Evergrande suspended trading of its shares in Hong Kong on Monday.
In a document it filed with the Hong Kong Stock Exchange on Tuesday, the company said it would resume operations.
He also confirmed that he would "actively communicate" with authorities about the Ocean Flower Island project and "resolve the problem appropriately."
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Xi Jinping's dilemma in the face of the Evergrande crisis 4:49
The shares rose as much as 10% after trading began in the early afternoon, before cutting earnings.
They were up 1.3% for the last time.
In Tuesday's filing, Evergrande also said it achieved contract sales of 443.02 billion yuan ($ 70 billion) by 2021. That's 39% less than the 2020 sales figure. And when it comes to liquidity, the company said that "it will actively maintain communication with creditors, striving to resolve risks and safeguarding the legitimate rights and interests of all parties."
Evergrande's problems
Evergrande - which was China's second-largest real estate developer by sales in 2020 - is reeling under more than $ 300 billion in total liabilities.
Evergrande can't pay its debts and China struggles to contain the consequences
The company has struggled for months to raise cash to repay lenders.
And the president of the company, Xu Jiayin, has reportedly been selling personal assets to shore up his finances.
But that doesn't seem like enough to prevent default.
In December, Fitch Ratings declared that the company had defaulted on its debt, a downgrade the credit rating agency said reflected Evergrande's inability to pay the interest due that month on two dollar-denominated bonds.
Evergrande defaulted on its debt, according to Fitch Ratings
Analysts have long been concerned that an Evergrande collapse could bring broader risks to China's housing market, hurting homeowners and the broader financial system.
Real estate and related industries represent up to 30% of the country's GDP.
The US Federal Reserve warned in November that problems in the Chinese real estate sector could hurt the world economy.
There is already enough evidence that Beijing is taking a leadership role in guiding Evergrande through a restructuring of its debt and the expansion of business operations.
But analysts warned nonetheless that the real estate crisis remains an imminent threat to China.
Evergrande
