China Evergrande shares suspended amid news of demolition orders | Evergrande

[ad_1]

The embattled real estate developer announced Monday that trading of shares in China’s Evergrande Group has been suspended.

Evergrande gave no reason for comment, but it came amid Chinese media reports that authorities in the southern Hainan province ordered the world’s largest debt developer to demolish 39 buildings in 10 days because building permits were obtained illegally.

It is said to be related to the massive Ocean Flower Project, a resort-style development built on islands off the coast of Hainan, according to Chinese news outlet Cailian.

The reports added that the buildings cover 435,000 square meters, citing an official notification to the Evergrande unit in Hainan.

Regulators in the city of Danzhou said in November that they would block Evergrande’s plan to pay debts to contractors and other creditors by giving them property, Caixin said.

Evergrande is struggling to repay more than $300bn (£222bn) in commitments, including nearly $20bn in international market bonds that ratings firms deemed in default last month after defaulting.

The real estate developer missed a new $255 million coupon payment due last Tuesday even though they both have a 30-day grace period. Similar to the succession of non-payments in the last quarter of 2021, the company did not provide any comment.

The company formed a risk management committee with several members from government companies, and said it would work actively with its creditors.

On Friday, Evergrande backtracked on its plans to make payments to investors in its wealth management products, saying that every investor in its wealth management product can expect to receive 8,000 yuan ($1,257) per month as a base payment for three months regardless of when the investment is due. .

This move highlights the developer’s increasing liquidity pressures.

Shares of Evergrande fell 89% last year, to close at 1.59 Hong Kong dollars ($0.20; £0.15) on Friday.

The electric vehicle unit, China Evergrande New Energy Vehicle Group, was down 10% in early trading Monday, while its property management unit Evergrande Services tumbled 2.3%.

Evergrande isn’t the only Chinese real estate developer mired in a liquidity crunch. Analysts at Nomura said last month that the sector owed a total of $19.8 billion in foreign debt denominated in US dollars in the first three months of 2022. In the second quarter of this year, they should find another $18.5 billion, while also meeting payments of billions from Domestic debt in yuan.

Other developers at risk of default include Kaisa, which missed a huge payment in December and has twice suspended its shares in recent months. Its stock has lost 75% of its value in the past year.

Analysts at S&P estimated that a third of Chinese developers could face a liquidity crunch in the next 12 months.

Developers must also find 1.1 trillion yuan ($172 billion) in back pay owed to construction workers before the Lunar New Year begins at the beginning of February.

[ad_2]