Banks have seized about $2 billion in cash from Evergrande, the Chinese company said on Tuesday, as it announced a delay in publishing its annual earnings.
China’s second-largest developer said it will not be able to meet a March 31 deadline to publish audited results for 2021 – the year it defaulted on debt as prices and activity in China’s vast real estate sector plummeted.
One of its units – Evergrande Property Services – said some of its creditors had unexpectedly claimed about 13.4 billion yuan ($2.1 billion) of their bank deposits, pledged as collateral for “third-party guarantees”.
It did not specify who the creditors were, saying only that the banks took control of the money. The real estate services unit said it would establish an independent committee to investigate.
The real estate developer is one of China’s largest and most indebted, with more than $300 billion in total liabilities, including about $19 billion in outstanding offshore bonds held by international asset managers and private banks on behalf of their clients.
Evergrande was declared in default by Fitch Ratings in December — a downgrade that the ratings agency said reflected the company’s inability to pay interest owed on two dollar-denominated bonds.
In 2020, Beijing began cracking down on excessive borrowing from developers in a bid to curb its high leverage and curb runaway property prices.
But the industry’s woes escalated significantly last fall, as Evergrande began warning markets about urgent liquidity problems.
There is evidence now that the Chinese government is taking a leading role in guiding Evergrande through a debt restructuring and expanding business operations.
But some of the company’s international creditors are losing patience.
A group of bondholders abroad threatened in January to take legal action over the “opaque” debt restructuring process.
They said they would “seriously consider enforcement action” after Evergrande failed to substantially engage with them over the reorganization of their operations.
Evergrande has another interest payment expected next Wednesday.
The company said in its foreign exchange filing that “the audit work is not yet complete” and that “drastic changes” in the operating environment and the Covid-19 pandemic have led to delays in preparing its earnings. They will be published “as soon as possible” after the audit is completed, he said.
Other major developers are also having trouble meeting the March 31 deadline for earnings.
Sunac China and Shimao China, which ranked 3rd and 12th in real estate sales last year, said last Monday they would also have to delay publishing their annual results.
Both cited Covid-19-related restrictions, such as quarantines and travel restrictions, to delay the audit process.
Ronshine China, which was among the top 30 developers last year, also said it will not be able to submit audited results until March 31 as its original auditor resigned, according to a company exchange document on Monday.
The company said later that day that it has hired a new auditor and will publish the audited results “as soon as possible.”
Source: CNN Brasil
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