- Chinese real estate firm Evergrande Group fails to repay creditors.
- Evergrande shares fell 20% on Monday after the Company announced it cannot guarantee enough funds to meet its financial obligations.
- The ailing Chinese developer currently has around US$300 billion in total liabilities.
Shares of Chinese real estate firm – Evergrande Group dropped by 20% on Monday to hit an 11-year low after the firm announced that it cannot guarantee enough funds to meet its financial obligations, which currently has around US$300 billion in total liabilities.
The stock closed 20% lower at 1.81 Hong Kong dollars hitting the lowest since 2009 on Monday. Since the beginning of FY21, the company has lost around 87% of its value.
The company now must repay its creditors with an expiry of 30-day grace period on interest payments on its dollar-denominated bonds. However, as per the media reports, the provincial government of Guangdong summoned Evergrande’s chairman Xu to a meeting on Friday.
In a statement, the government said that it would send a working group to the heavily indebted company. Guangdong government will now help the ailing real estate company to maintain normal operations while strengthening its internal controls.
Meanwhile, the People’s Bank of China, securities regulator and the banking and insurance regulator said that any risk from the company to the financial or property market including homeowners can be controlled reiterating the previous accusations on the company that got it into financial trouble.
Moreover, Evergrande’s chairman Xu has been selling off his personal assets to bolster company’s finances. However, Evergrande’s Friday announcement is a signal of company being unable to make any payment within the deadline. The company also failed to make a separate payment of US$260 million last week.