China’s Guangdong summons Evergrande boss after debt repayment warning

The company logo is seen at the headquarters of the China Evergrande Group in Shenzhen, Guangdong Province, China on September 26, 2021. REUTERS / Aly Song

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  • Evergrande says he may not have enough funds to meet his obligations
  • Chinese central bank and regulators intervene to try to reassure the market

BEIJING, Dec.3 (Reuters) – China’s Guangdong Province summoned the chairman of China Evergrande Group (3333.HK) on Friday after the property developer said there was “no guarantee” he would have enough funds to repay the debt, while regulators sought to reassure the markets.

Evergrande, once China’s best-selling developer, is grappling with over $ 300 billion in liabilities, fueling fears of a potential collapse that could send shockwaves through the country’s real estate industry and beyond .

The company said in a filing on the Hong Kong Stock Exchange on Friday that it had received a demand from creditors to pay around $ 260 million. He is already late in paying $ 82.5 million in coupons due on November 6. read more

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“In view of the current state of liquidity (…) there is no guarantee that the group will have sufficient funds to continue to meet its financial obligations”, said Evergrande, adding that the creditors could demand an accelerated repayment if he doesn’t.

This prompted the government of Guangdong, where the company is based, to summon Evergrande chairman Hui Ka Yan.

The provincial government said in a statement that it would send – at Evergrande’s request – a task force to the company to oversee risk management, strengthen internal controls and maintain normal operations.

Guangdong authorities were not the only government entity to address the Evergrande issue on Friday.

In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator, and its securities regulator sought to reassure the market that any risk to the broader real estate sector could be contained.

“Evergrande’s problem has been mainly caused by its own mismanagement and rapid expansion,” the People’s Bank of China said.

The short-term risks caused by a single real estate company will not undermine the fundraising in the market in the medium to long term, he said, adding that home sales, land purchases and financing “are already returned to normal in China “.

The China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande issue would not affect normal industry operations and would increase support for guaranteed rental housing.

He added that he believed domestic and foreign regulators would deal fairly with Evergrande-related issues, while the China Securities Regulatory Commission (CSRC) said any fallout in the capital market was “controllable” and that ” it would maintain its support for the financing needs of real estate developers.

In its filing, Evergrande said it intends to actively engage with creditors to come up with a “viable restructuring plan” to deal with its offshore debts.

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Reporting from Beijing Newswroom and Arundhati Dutta in Bengaluru; additional reporting by Sumeet Chatterjee in Hong Kong; Writing by Tom Daly; Editing by Sriraj Kalluvila, Louise Heavens and Emelia Sithole-Matarise

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Tana T. Thorsen