Indebted Evergrande expects 'significant continuing decline' in September sales
By Global Times Published: Sep 14, 2021 11:23 AM
Indebted Chinese property developer Evergrande said Tuesday that its contract sales are expected to see "significant continuing decline" in September, thereby resulting in the continuous deterioration of cash collection and would place "tremendous pressure" on the group cash flow and liquidity.
The statement just came after it denied rumors about bankruptcy on Monday, while admitting that it is facing financial challenges.
The group has been bogged down in a liquidity crisis in recent months, reportedly facing deadlines on more than $300 billion in liabilities, failing to pay overdue bills and imposing lengthy repayment delays on holders of wealth management products.
According to Evergrande's interim financial results, its short-term liability to be due within a year was 240 billion yuan ($37.2 billion) as of June 30, while cash and cash equivalents were only valued at 86.77 billion yuan during the same period.
According to the company's financial statement, Evergrande's short-term liability to be due within a year was 240 billion yuan as of June 30, while cash and cash equivalents were only valued at 86.77 billion yuan during the same period.
Evergrande said in the latest statement that it is seeking other measures, including selling investment properties, hotels and other properties, to ease the liquidity issues but has not reached expected outcomes.
The group said that it has been actively exploring options with potential investors on the sales of part of its stakes in China Evergrande New Energy Vehicle Group Ltd and Evergrande Property Services Group Ltd, as well as purchasers for its office building in Hong Kong. However, it is uncertain whether the group will be able to make such sales, it said.
In addition, two subsidiaries of Evergrande failed to discharge their guarantee obligations as scheduled for wealth management products issued by third parties, totaling approximately at 934 million yuan.
Evergrande said that it will continue to take measures including adjusting its project development timetable, further cost cutting, focusing on sales and payment collection, striving for renewal and extension of borrowings to increase liquidity.
In addition, the group said that it has engaged with financial advisers to assess its capital structure, evaluate the liquidity of the group and explore all feasible solutions to ease the current liquidity issue and reach an optimal solution for all stakeholders as soon as possible.
China's central bank and the banking and securities regulator summoned Evergrande executives on August 19 to discuss the firm's present situation, urging the property developer to fully implement the central government's strategic measures aimed at maintaining the healthy and sustainable development of the property market by not extending business activities, actively tackling debt and promoting stability within the property and financial market.
Evergrande shares continued to fall on Tuesday, with the group plunging nearly eight percent, its new energy branch down 15 percent and its property services arm down five percent as of 10 am during morning trading.
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