Evergrande: Crisis-hit property giant faces
deadline after bosses quit
Published
5 hours ago
https://www.bbc.co.uk/news/business-62287685
Embattled Chinese real estate giant Evergrande is
expected to deliver a preliminary restructuring plan this week, following the
exit of two bosses.
The firm
says its chief executive and finance head have resigned, after an internal
probe found that they misused around $2bn (£1.7bn) in loans.
Evergrande
has more than $300bn in liabilities and defaulted on its debts late last year.
The crisis
has spooked traders who fear contagion in China's property sector.
On Friday,
Evergrande said it found that chief executive Xia Haijun and chief financial
officer Pan Darong were involved in diverting 13.4bn yuan ($2bn; £1.7bn) in
loans secured by its property services unit to the wider group.
The firm
said in a filing to the Hong Kong Stock Exchange that Mr Xia and Mr Pan had
resigned because of their "involvement in the arrangement of the
pledges".
In a
separate statement, it said the funds "were transferred and diverted back
to the group via third parties and were used for the general operations of the
group".
Evergrande
added that it was in talks with its property services unit over a repayment
plan.
A $2.6bn
deal to sell a majority stake in the unit to a rival developer fell through in
October.
Evergrande,
which is the world's most indebted property developer, had been struggling to
make payments on its over $300bn of liabilities and missed a crucial repayment
deadline on its offshore debt in December.
Its shares
have fallen by more than 75% over the last year in Hong Kong and have been
suspended from trading for months.
The company
is scheduled to announce a preliminary plan to restructure its debts before
next week.
China's
property crisis is estimated to have wiped more than a trillion dollars off the
value of the sector last year.
The very
serious potential fallout from Evergrande collapsing has led some analysts to
suggest that Beijing may step in.
On Monday,
Japanese banking giant Nomura said "an increasing number of developers
have failed to repay their debt and continue their construction works"
since the Evergrande crisis.
Also on
Monday, it was reported that China was planning to start a real estate fund to
support more than a dozen property developers, including Evergrande.
The fund
could be worth up to 300bn yuan, according to reports.
Home sales
in China have fallen for 11 consecutive months, official data shows. That is
the longest slump since China created a private property market in the late
1990s.
Several
Chinese developers have halted the construction of homes that had already been
sold, because of concerns over cash flow.
In recent
weeks, some home buyers have threatened to stop paying their mortgages until
the work restarts.
More than
200 projects by at least 80 developers have been affected, according to the
Shanghai-based E-house China Research and Development Institution.
The China
Banking and Insurance Regulatory Commission has pledged to help local
governments in "guaranteeing the delivery of homes," state media
reported.
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