Evergrande halts stock trading on possible sale of property management unit as more debt deadlines approach
- Hopson reportedly considering buying controlling stake of Evergrande’s property management unit, according to a mainland media report
- Evergrande had more than US$300 billion in liabilities on June 30 and faces more repayment deadlines on offshore bonds this month
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Unpaid by Evergrande, supplier sells car and home to rescue his business
China takes a hard look at Evergrande’s projects to ring fence any collapse from hurting their jurisdictions
The company has engaged in a years-long spending spree to diversify its business beyond property development, expanding into everything from wealth management to electric vehicles (EV), draining cash. The liquidity squeeze has worsened as Beijing adopted new rules designed to tamp down speculative property price bubbles.
The “three red lines” requirements adopted by the People’s Bank of China in August of last year limited the ability of developers to borrow, making it more difficult for Evergrande and other developers to borrow from banks and cover their funding needs between the start of building a property and the time they sell a flat.
Evergrande had about 240 billion yuan (US$37 billion) in short-term borrowings, from bank loans to offshore bonds, that are due by the end of June 2022, according to its half-year report. That is nearly as much as the 259 billion yuan collectively owed in the next 12 months by its three closest competitors: Country Garden, China Vanke and Sunac China Holdings.
It remains unclear whether Evergrande made a coupon payment of US$83.5 million on offshore debt due on September 23, or a separate payment of US$45.2 million last week. The company has a 30-day grace period before it can be declared in default on the bonds.
On Sunday, Bloomberg, citing people familiar with the matter, said Evergrande had guaranteed a US$260 million bond by an entity called Jumbo Fortune Enterprises, with an effective maturity date of Monday and could potentially be found in default within five days if the principal is not paid.
As of June 30, the developer had a portfolio of completed properties worth 144 billion yuan and a stable of properties under development worth 1.3 trillion yuan.
However, Evergrande has warned it is facing difficulty selling homes as a result of the negative news surrounding the company, saying it expected a “significant continuing decline” in contracted sales in September. It also has been tapping these property assets to pay off suppliers as its liquidity crisis worsened this year.
A number of prominent shareholders and bondholders have cut their exposure to Evergrande in recent weeks as its prospects have become more cloudy.
