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June 8, 2021

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Home » Business » Real Estate

Property firm allays debt worries

Source: Agencies | 00:00 UTC+8 June 8, 2021 | Print Edition

Chinese property developer Evergrande Group said yesterday it was arranging payment for some of its project companies’ commercial paper that had not been repaid on time.

In a statement, Evergrande said the amounts involved were “very small,” but it attached great importance to the matter and was arranging payment.

Evergrande’s debt problem has become a major investor concern since a leaked document in September showed the developer sought government help to avert a cash crunch.

The nation’s major developer has been scrambling for cash as it seeks to ease such concerns and meet China’s new debt-ratio caps. China is tackling excessive borrowing in the real estate development sector with planned new debt-ratio caps dubbed the “three red lines.”

The company, with interest-bearing indebtedness standing at 716.5 billion yuan (US$112 billion) at the end of 2020, has vowed to reduce its debt by 20 percent, or 150 billion yuan, this year.

Chairman Xu Jiayin told the company’s business partners in an annual meeting last Thursday that Evergrande will be able to achieve this month one of the three debt ratio caps set by regulators.

The developer aims to achieve the other two requirements by the end of 2021 and 2022, respectively.

A source with knowledge of the matter said a few of Evergrande’s project companies that were not operating well had not repaid some commercial paper, but the group has pressured them to arrange the payments.

On an online complaint platform operated by Sina Corp, where consumers can take up issues they have with any company operating in China, at least four paper holders posted since mid-May saying they had not received payments from different Evergrande units.

One post, showing images of six commercial papers, said four of Evergrande’s units in Kunming, capital of Yunnan Province, have delayed a total of close to 4 million yuan payments for three months.

Shares in Evergrande dropped over 5 percent to HK$10.82 (US$1.4) — their lowest level since March last year — before closing up 3.2 percent yesterday. The stock has lost 21 percent so far this year.

In the statement yesterday, the developer said the operation of the group is normal, and it has never had any late repayment or defaults in the last 25 years since its establishment.

It also said its financial business with Shengjing Bank, in which it has a 36 percent stake, complies with legal requirements.

Caixin reported in late May that China’s banking and insurance watchdog was probing connected transactions worth over 100 billion yuan between Evergrande and Shengjing.

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