HONG KONG (Reuters) – Cash-strapped developer China Evergrande Group said it held an internal meeting late on Wednesday night, in which its chairman urged company executives to ensure the quality delivery of properties and redemption of wealth management products. There is mounting political pressure on the company to act as homebuyers and retail investors grow increasingly angry of having sunk their savings in the properties and wealth management products of highly indebted Evergrande. With $305 billion in liabilities, Evergrande is struggling to meet its debt obligations and investors worry that the rot could spread to creditors including banks in China and abroad. Global markets were closely watching whether Evergrande will be able to pay interest on one of its dollar bonds due on Thursday, after some relief the previous day when the People’s Bank of China injected 90 billion yuan ($13.9 billion) into the banking system and an Evergrande unit said it had “resolved” a coupon payment on an onshore bond. At a meeting held at 11:00 pm (1500 GMT), Evergrande chairman stressed to staff the importance to resume constructions and to have a “highly responsible attitude” towards helping wealth investors redeem their products, adding it was the company’s “top priority” to help retail investors redeem the investment products sold by the $ 305 billion debt-ridden real estate developer. In a note, the president and founder Hui Ka Yan assured that “the company will do its best to resume work and production”, urging “executives to ensure quality deliveries”. Yesterday, the company said it had “settled” the payment of a $ 35.9 million coupon on a domestic bond maturing today. Evergrande still owes interest on 83.5 million of another dollar bond today. Real estate Developer China Evergrande Group said that online discussion about a bankruptcy and restructuring of the company was “totally untrue.” In a statement, Evergrande said it was facing “unprecedented difficulties” but would do everything possible to resume work and protect the legitimate rights and interests of its customers.
Evergrande founder calls for construction, sales to resume
BEIJING: The head of teetering Chinese developer Evergrande has urged staff to resume construction and sales to deliver properties, state media reported on Thursday (Sep 23), as the firm battles to avoid a collapse that could send shockwaves through the world’s number two economy. Furious homebuyers and investors around the country have gathered to demand repayment as the developer drowns in a sea of debt worth more than US$300 billion, and struggles to meet its obligations. The comments came as the company was due to pay interest to foreign bondholders on Thursday, with expectations it will miss the deadline, starting the clock on a countdown to what could be a default in 30 days. Evergrande had not issued any statements on the bond deadline as of Thursday evening. Xu Jiayin, the billionaire who founded the company in 1996, called more than 4,000 Evergrande managers to a meeting shortly before midnight on Wednesday, where he called on them to “devote all their energy to resuming work and production and ensuring that properties are delivered”, the state-owned China Securities Journal reported. He also said the group must “make every effort to fulfil” payment plans the company had previously announced, the Journal reported. The privately owned conglomerate had previously offered to repay some debts in kind, promising creditors including suppliers, contractors and investors parking spaces and commercial units instead of cash. Xu on Wednesday night promised to maintain a “highly responsible attitude toward investors”.“Only by fully resuming work and production, resuming sales and resuming operations can the rights and interests of home buyers be protected and smooth payment of investment product buyers ensured,” he said, according to the report. The crisis sent shivers through world markets on Monday as traders feared a collapse at one of China’s biggest property firms would spill over into the economy and have painful knock-on effects globally, just as countries battle to overcome the impact of the coronavirus pandemic. However, those concerns were eased slightly on Wednesday when Evergrande said it had reached a deal with domestic bondholders to repay interest on their notes on Thursday. Xu’s remarks come days after the tycoon reportedly told staff he believed the group will “step out of the darkest moment soon”. Evergrande’s liquidity crunch has triggered public anger and rare protests outside its offices in China as investors and suppliers demand their money back. The group has admitted facing “unprecedented challenges” and warned that it may not be able to meet its liabilities. The country’s real estate sector has been under tightened scrutiny in recent months, with regulators announcing caps for three different debt ratios in a scheme dubbed “three red lines” last year. The curbs have been followed by a slowdown in the country’s property sector, with ratings agency Fitch on Thursday cutting its growth forecast for the Chinese economy this year over headwinds faced by developers. Nick Note: you are seeing creditor negotiations China style. Its typical and the decision has been made China will not turn this into a national or international crises… Its a mater of arranging the best terms of surrender and call it a victory