Evergrande crisis: work resumes on 10 projects as developer restores calm, buys time to repay more creditors
- Company says in WeChat post that projects in six mainland cities have restarted and pledges to fulfil its responsibility to homebuyers
- Homebuyers, creditors may have seen ‘a ray of hope’ but Evergrande faces more repayment tests ahead, consultant says
The developer, saddled with 1.97 trillion yuan (US$308.5 billion) of liabilities, identified the projects in Shenzhen, Dongguan, Jiangmen, Shanwei, Zhuhai, and Zhongshan with photos of buildings and workers at construction sites in a statement posted on its WeChat social media account.
The group will shoulder the social responsibility and ensure completion of the buildings, according to the statement, saying it will “make an all-out effort to comply with the governments’ requirements.”
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World’s most indebted developer, China Evergrande Group, buys time to repay more creditors
Evergrande had land reserves covering 778 projects in 233 cities across China as of June 30, according to its latest interim report. Some of them had been suspended because of its failure to pay suppliers and contractors, a crisis that shook the industry and investors in Chinese offshore property stocks and bonds.
“The statement aimed to trigger an upbeat mood about Evergrande’s outlook,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “Its homebuyers, creditors and shareholders may have seen a ray of hope after the project resumption but the company will still be struggling with upcoming default tests.”
It had 571.8 billion yuan of borrowings from lenders and creditors on June 30, including 240 billion yuan due within 12 months. It had US$19.9 billion of dollar-based bonds outstanding. While Evergrande has remitted US$83.5 million interest to offshore bondholders last week before a 30-day grace period expired on Saturday, more interest-payment deadlines await before the year is out.
Yuexiu Property has also reportedly walked away from a US$1.7 billion plan to buy the 26-storey China Evergrande office tower in Wan Chai, Hong Kong. The developer, also based in southern Guangdong province, has instead decided to raise cash by selling one of its prized assets.
The firm announced a plan to inject an office building known as Yuexiu Financial Tower, one of the 10 tallest buildings in the provincial capital of Guangzhou, into Yuexiu REIT for 7.8 billion yuan, according to a stock exchange filing late Sunday.
Additional reporting by Cheryl Heng