Struggling Chinese property developer Evergrande saw its shares dip to an 11-year low after strong indications that it is on the verge of a potentially disastrous default and could be forced into a full-fledged restructuring.
The company has gone from one crisis to another in recent months as it faced a series of debt repayments – three times waiting until the last possible moment to accumulate the cash needed to stay afloat.
But a statement from the company over the weekend said there was “no guarantee” the group could meet its obligations and added that creditors had demanded immediate repayment of a total of $ 260 million. dollars (£ 196 million).
His most pressing issue is how to repay $ 82.5 million owed on Monday – a deadline pushed back by 30 days when he failed to meet the obligation by the due date in November.
“Since September 2021, the group has been diligently examining its capital structure and liquidity conditions with the help of its financial and legal advisers, evaluating all available strategic options and maintaining an ongoing dialogue with offshore creditors,” the press release said. .
“In light of the current state of the group’s liquidity, there can be no assurance that the group will have sufficient funds to continue to meet its financial obligations … The company has received a request to perform its obligations under ” a guarantee in the amount of approximately 260 USD. mr. In the event that the group is unable to meet its guarantee obligations or certain other financial obligations, this could lead the creditors to demand an acceleration of the repayment.
According to reports, its billionaire founder Xu Jiayin was summoned by officials to explain the statement, and the Guangdong provincial government said it was sending a team to Evergrande to “oversee and promote enterprise risk management.”
The constant stream of bad news pushed China Evergrande Group shares down 12% in Hong Kong on Monday. They now stand at HK $ 1.98 ($ 0.2540), the lowest level since May 2010.
Evergrande was once the best-selling developer in China, but is now grappling with more than $ 300 billion in liabilities, meaning a collapse could spill over to the real estate industry and beyond.
Analysts have warned that a third of Chinese developers could face a similar crisis as the country’s bloated real estate market stalls after a crackdown on reckless borrowing by Xi Jinping’s government in Beijing.
On Monday, a small developer, Sunshine 100 China Holdings Ltd, defaulted on $ 179 million in debt and interest payments that were owed Sunday.
The default was due to “liquidity problems resulting from the negative impact of a number of factors, including the macroeconomic environment and the real estate sector,” the company said in an exchange document.
Sunshine 100 has struggled several times to honor its debts this year and also defaulted on a bond repayment in August. The company now has $ 385 million in dollar banknotes outstanding, according to data compiled by Bloomberg.
Investors are also concerned about a potential default by Kaisa Group Holdings Ltd, which faces a $ 400 million bond maturity on Tuesday because it failed to secure a debt swap that would have won it. a crucial time to repay some of its obligations. After Evergrande, it owes the most to foreign bondholders, with debts of $ 12 billion.