Unit of Chinese property giant Evergrande ordered to pay $1.1 billion
A unit of embattled Chinese developer Evergrande has failed to repay its loans and must pay a guarantor $1.1 billion, the company said in a Hong Kong stock exchange filing.
Evergrande has been involved in restructuring negotiations after racking up $300 billion in liabilities in the wake of Beijing’s crackdown on excessive debt and rampant speculation in the real estate sector.
The announcement comes after the company failed to publish a “preliminary restructuring proposal” by the end of July, despite assuring creditors it was on track to meet the deadline.
Evergrande said on July 30 it had made “positive progress” in its restructuring process, floating the potential use of equity in its offshore subsidiaries to repay bondholders but falling short of providing concrete details.
And on July 31, the company said subsidiary Evergrande Group (Nanchang) had failed to fulfil its debt obligations to an unnamed third party.
Evergrande, a major name in China’s property sector, has in recent months scrambled to offload assets, with chairman Hui Ka Yan paying some of its debts using his personal wealth.
Its woes are emblematic of the problems rippling across China’s massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash.
With developers strapped for finances and projects stalling, furious homebuyers in dozens of cities have also begun refusing to pay their mortgages.
“The central government needs to take strong and credible measures to ensure stalled projects are finished and delivered” to restore confidence, said Andrew Baston of Gavekal Dragonomics.
“The problem is mostly a political one: the leadership has committed significant political capital to strict property policies over the past few years,” he added.