Evergrande China Center sign at the entrance of a building in Hong Kong, China. EFE / EPA / JEROME FAVRE
Shanghai (China), Dec 6 (EFE) .- Shares of the indebted Chinese real estate giant Evergrande listed in Hong Kong fell today to lows since mid-2010 after the company announced that it may not be able to service all its debt and that it will negotiate a restructuring plan with its ‘offshore’ creditors.
Shortly after 11.00 local time (03.00 GMT), Evergrande shares fell 10.2%, which also translates into a cumulative drop of 85.7% so far this year.
The announcement also meant a jug of cold water for investors because this Monday is also the deadline for extensions to pay a total of $ 82.5 million in interest on two packages of ‘offshore’ bonds, one maturing in November 2022 and another, one year later.
Evergrande should have paid those amounts on November 6, but the clauses of its bonds include an extension of 30 calendar days after the payment date before the company can be considered officially in default.
The economic news portal Caixin pointed out that the non-payment could generate a situation of ‘cross-default’ (“crossed insolvency”), in which the default with a single creditor is enough for others to claim the repayment of their loans.
That media recalled that Evergrande’s ‘offshore’ debt is more than 19,000 million dollars, a relatively small amount compared to the group’s total liabilities, which exceeds 300,000 million dollars, although according to the Chinese authorities only a third of that amount corresponds to financial obligations.
After weeks of certain calm in which the conglomerate was avoiding the defaults on the horn on several occasions, on Friday night the alarms sounded again after a statement in which Evergrande advanced the possible non-payment of 260 million dollars of a guarantee .
The group revealed that it had received a lawsuit to meet the aforementioned payment at a time when “there is no guarantee” that it has sufficient funds to meet its financial obligations in the face of its liquidity crisis, caused in part by the restrictions imposed. by Beijing to access to bank financing for the most indebted developers.
In the same document, the group announced its intention to negotiate with its creditors a “viable” plan for the restructuring of its offshore debt.
In the minutes following the publication of the communiqué, the Chinese authorities reacted in chain: first, the authorities of the southeastern province of Guangzhou, where the company is based, announced that they would assign a “working group” to Evergrande to “resolve their problems. risks effectively. “
After that, the People’s Bank of China (BPC, central) and the regulators of banks and insurance companies and the stock market stepped up to launch messages of calm and ensure that the risk of contagion from the Evergrande crisis for other companies in the sector it is “controllable” and that it “will not have a negative impact” on the country’s financial system.
The BPC also took the opportunity to reiterate that its priority is “to protect the legitimate rights of home buyers” and blame Evergrande for creating its own problems due to what it called “mismanagement and unbridled expansion.”