A Chinese property giant warns of ‘tremendous’ financial pressure

China Evergrande, a crisis-ridden asset giant, has become a symbol of debt and excess in the world’s second largest economy. said on Tuesday that it faced “tremendous” financial pressure and had hired restructuring experts to “explore all possible solutions” for its future.

However, the company’s fate remains unclear, as it struggles in a country where business troubles often draw the direct attention – and direct interference – of Beijing.

Evergrande acknowledged that its finances have taken a sharp turn, with its already battered shares falling 12 percent on Tuesday. Its shares have lost more than four-fifths of their value in the past year.

Its foreign-traded bonds also fell, in some cases leaving global investors with investments of about 25 cents in dollars.

Property developer corporate has become China’s biggest mess. its fate is in danger The asset sector and China’s broader financial system, a test of the resolve of regulators who are trying to clean up the country’s corporate culture.

Evergrande has been hit with a barrage of negative attention in recent weeks from panicked home buyers and experts warning of an imminent default. It owes suppliers, creditors and investors more than $300 billion. Hundreds of its unfinished property developments are on the horizon in cities across the country.

Evergrande’s troubles have cast doubt on China’s property market, one of its most important economic growth engines, but it is also a sign that is showing flags. Shares of other Chinese property developers also fell after Evergrande’s disclosure on Tuesday.

under pressure from regulators To clean up its finances and reduce its debt, Evergrande is trying to sell off pieces of its vast empire, such as an electric vehicle unit and an asset management services conglomerate.

But on Tuesday, the company said it was “unsure whether the group would be able to complete any such sales.” It blamed media coverage for its troubles, saying “ongoing negative media reports” had scared home buyers and would result in disappointing sales this month that would put pressure on its cash flow.

The fate of China Evergrande may ultimately lie in the hands of the Chinese government.

Rating firms have warned that the company is at high risk of defaulting on its debt and other obligations. Yet compared to other major countries, Beijing keeps its financial system in a firm hand and can deter creditors, at least for the time being. The central government controls China’s largest banks and financial institutions and strictly limits the flow of money across its borders.

The government has taken steps on the staggering of the previous companies. Beijing three years ago confiscated control Of the Anbang Insurance Group, which had a vast overseas empire that included the Waldorf-Astoria Hotel in Manhattan. the officers had Its president was detained months ago, and that was later sent to prison for fraud.

Early last year, local government officials moved to seize control of HNA, a transportation and logistics conglomerate that had been mired in debt from costly foreign takeovers. Under his guidance, the troubled company was pushed into administration.

Until recently, Evergrande tried to strike a more positive tone, even as experts warned that the developer was approaching a default.

As rumors spread online about an impending bankruptcy and plans to lay off most of its employees, Evergrande issued a denial on Monday, saying it was “fully fulfilling its corporate responsibility.”

“The rumors about the bankruptcy and reorganization of Evergrande that have recently appeared on the Internet are completely untrue,” the company said. said on Monday night.

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