The Evergrande Crisis Continues: Banks Seize $2 Billion, Profits Delayed

Evergrande He said It will not be able to meet the March 31 deadline to publish audited results for 2021, the year that saw it defaulting on its debts With the decline in prices and activity in the vast real estate sector in China.

One of its units – Evergrande Property Services – said some of its lenders unexpectedly demanded about 13.4 billion yuan ($2.1 billion) of its bank deposits pledged as security for “third-party guarantees”.

She did not specify who the lenders were, saying only that the banks had controlled the cash. The Real Estate Services Unit said it would form an independent commission to investigate.

In a call with global investors on Wednesday, the company said it would submit a debt restructuring proposal to creditors by the end of July.

During the call, Seo Chun, the company’s CEO, said Evergrande would “enhance communication” with creditors.

He said Evergrande currently has $22.7 billion in foreign debt, including bonds, project loans and private financing. He added that the company has so far contacted 89 external creditors to exchange views with them.

The real estate developer is one of the largest and most indebted companies in China with more than $300 billion in total liabilities.

Credit rating agency Fitch announced that Evergrande defaulted in December — a downgrade that the ratings agency said reflected the company’s inability to pay interest on dollar-denominated bonds.

In 2020, Beijing began cracking down on excessive borrowing by developers in an effort to rein in their rising clout and curb unruly home prices. But the sector’s problems escalated dramatically last fall when Evergrande began urgently warning markets about liquidity problems.

there Guide Now that the Chinese government has taken a leading role in guiding Evergrande through its debt restructuring and sprawling business operations.

But the patience of some of the company’s international creditors is running out.

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In January, a group of overseas bondholders threatened legal action over an “opaque” debt restructuring process. They said they would “seriously consider enforcement action” after Evergrande failed to engage them significantly about reorganizing its operations.

Evergrande has another interest payment due on Wednesday.

The company said in its stock exchange filing that “the audit work is not yet complete”, and that “dramatic changes” in the operating environment and the Covid-19 pandemic have led to delays in preparing its earnings. It said it would publish it “as soon as practicable” after the audit is completed.

Another big Chinese real estate developer may need to sell his property

Other major developers are also having trouble meeting the March 31 earnings deadline.

China Snack And the CHIMAO CHINAWhich ranked third and 12th in property sales last year, said Monday it will also have to delay publishing its annual results. Both cited Covid-related restrictions, such as quarantines and travel restrictions, for disrupting the vetting process.
Runshine China, which was among the top 30 developers last year, said it will not be able to provide audited results by March 31 because the original auditor has resigned, according to exchange deposit by the company on Monday. Runshine China said later that day that it had appointed a new auditor and would publish the audited results “as soon as practicable.”

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