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Chinese officials say they will help Evergrande deal with crisis

Chinese officials said on Friday they would step in to help Evergrande deal with its crisis after the heavily indebted real estate giant warned it was in danger of failing to meet a major financial obligation and sought help from its provincial government .

The government of Guangdong, the southern province of China where the company is headquartered, said it would, at Evergrande’s request, send a working group to help manage risk.

The group is expected to oversee and improve the company’s risk management and internal controls, and help maintain normal operations, officials say. The government said the decision was taken after officials called the company’s president, Hui Ka Yan, to a meeting.

Also on Friday, the Central Bank of China said it supports the Guangdong government’s decision to intervene. The People’s Bank of China (PBoC), for its part, said it would cooperate with the efforts and work with other agencies and local governments to help reduce Evergrande’s risks and maintain stability in the country’s market properties. China’s banking and securities regulators also said they would work together to keep the property sector in general healthy.

Authorities also used harsh words for the company. “Evergrande’s risks are mainly due to its own mismanagement and blind expansion,” said the PBoC, echoing some of its earlier criticisms of the 25-year-old developer.

In a regulatory document, Evergrande said on Friday that it had received a demand for $260 million to “make up its obligations under a guarantee” and, if it fails to honor its commitments, some creditors may demand expedited repayment of amounts that are owed.

The developer also said it plans to work with international creditors on a restructuring plan, effectively admitting for the first time that its heavy debts. offshore are not sustainable.

The company stated that “it plans to actively engage with creditors offshore to formulate a viable debt restructuring plan offshore of the company for the benefit of all interested parties.”

Reference: CNN Brasil

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