[Epoch Times December 04, 2021](Epoch Times reporter Cheng Jing reported) After Evergrande Group recently issued an announcement that it may “unable to fulfill its financial guarantee responsibilities”, the Guangdong Provincial Government interviewed the founder of Evergrande Xu Jiayin that night and sent it out Working Group: The Central Bank of the Communist Party of China, the China Banking Regulatory Commission, and the China Securities Regulatory Commission expressed their views overnight to appease the market, but industry insiders believe that Evergrande’s debt crisis is difficult to solve.
Evergrande defaults on its first US dollar bond
Evergrande Group issued an announcement on the Hong Kong Stock Exchange on Friday (3rd) evening, stating that it has received a request for a guarantee obligation of US$260 million. responsibility”.
At present, Evergrande Group has a total of approximately RMB 2 trillion in debt, including USD 19.236 billion of outstanding USD debt. Caixin said that this means that Evergrande’s $19.236 billion undue USD debt cross default has been initiated.
Evergrande stated that since September, the group has been actively assessing the company’s capital structure and liquidity with financial advisors and legal advisors, exploring all feasible solutions, and “will actively maintain continuous communication with overseas creditors to develop feasible solutions for all stakeholders. Overseas restructuring plan”.
In addition, Evergrande Automobile also suddenly announced the issuance of 900 million shares, cashing out HK$2.7 billion per share at HK$3. According to the Hong Kong Stock Exchange, Evergrande reduced its holdings of 900 million shares of Evergrande Motor, involving a total investment of 2.7 billion Hong Kong dollars, the shareholding ratio fell from 72.89% to 63.84%, and the number of shares held from 7.248 billion shares to 6.348 billion shares.
That night, the CCP’s party and two sessions hurriedly expressed its position to “appease” the market.
The central bank issued an “answer to reporters’ questions,” stating that the risks of Evergrande Group are mainly due to its own mismanagement and blind expansion. The overseas US dollar bond market is highly market-oriented, and investors are relatively mature, believing that short-term risks for individual real estate companies will not affect financing in the medium- and long-term markets.
A spokesperson for the China Banking and Insurance Regulatory Commission also said in the evening, “This is an individual phenomenon in the market economy. We believe that domestic and foreign regulatory authorities will handle related matters in a fair and impartial manner in accordance with the law.”
The relevant person in charge of the China Securities Regulatory Commission said that the spillover impact of Evergrande Group’s risk events on the stable operation of the capital market is controllable.
Xu Jiayin was interviewed by the Guangdong faction working group
However, Evergrande’s first USD debt default has caused widespread concern. CBN News believes that the group’s announcement of a default of this $260 million private equity bond will most likely mean that it will stop paying future interest and due debt.
The Guangdong Provincial Government issued an announcement at 9 pm on Friday, expressing its high degree of concern, and immediately interviewed Xu Jiayin, the actual controller of Evergrande Group, and at the request of Evergrande Group, in order to effectively resolve risks, “send a working group to Evergrande” to supervise Corporate risk disposal work and maintenance of normal operations.
Since the beginning of 2021, Evergrande, which has a debt of nearly RMB 2 trillion, has been in a liquidity crisis continuously by various creditors’ rights protection. Beginning in September, local governments stepped in to conduct audit investigations in an attempt to resolve the debt crisis. Guangdong Province, the registered place of Evergrande Real Estate, assumes the lead responsibility for Evergrande’s risk disposal.
Caixin.com said that the Guangdong Provincial Political and Legal Affairs Commission has asked Evergrande to provide specific information about its various regional projects. It needs to submit a list of Evergrande Group’s national projects under construction, a list of construction workers and contact information for projects under construction; sales have not been delivered, Information sheets for buyers who have not applied for real estate certificates have been delivered, etc.
In the past period of time, Xu Jiayin, chairman of the board of directors of Evergrande, raised funds by selling personal equity and assets, raising a total of nearly 10 billion yuan, most of which were used to pay overseas debt interest, the redemption of Evergrande wealth management products, and general operations and employees of the group Salary etc.
Government mediation?Evergrande crisis is still difficult to solve
Evergrande Group is China’s largest real estate developer, with projects in more than 200 cities across the country, and also develops diversified businesses such as new energy vehicles, tourism, sports, finance, and health care.
According to Caixin.com, in the past two months, government departments in Huaxi District of Guiyang, Jingmen and Shiyan in Hubei, Langzhong in Sichuan, Ganzhou in Jiangxi, Ningbo in Zhejiang, Jiangjin District in Chongqing, Taizhou in Jiangsu, Quanzhou in Fujian, Changsha in Hunan, Nanchong in Sichuan, etc. The “Hengda Special Class Working Group” has been established.
An insider of Evergrande said that the most important task of the special team is to participate in the actual negotiation between Evergrande and the construction unit, urging the construction unit to resume work and production.
However, “due to the large funding gap for the resumption of work, even if local government departments intervene, the cycle for the parties to negotiate a solution will be longer.” The above-mentioned Evergrande insider revealed that only projects with money in the account are eligible for resumption of work.
Moreover, “Many projects of Evergrande have too much debt in the early stage. Even if the local government provides some financial assistance, it can only support a period of time.” The insider of Evergrande said, “During the negotiation, due to the presence of relevant departments, the construction unit did not Make it clear. But as soon as the agreement was signed, the two parties were deadlocked. How can we resume work?”
Editor in charge: Li Yuan#
.
