Evergrande boss wants to overcome “darkest moment”

Released on 21.09. 2021

  • A construction crane is on a new Evergrande housing project in Beijing. Photo: Andy Wong

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The possible payment default of the Chinese real estate company Evergrande continues to cause unrest among investors. The CEO now sends a letter to his employees.

Beijing (dpa) – The head of the collapse threatened Chinese real estate company Evergrande has encouraged employees in a letter. He is firmly convinced that one can overcome the “darkest moment”.

This is how CEO Xu Jiayin said in a letter sent on the occasion of the Chinese Moon Festival, which was circulated by the state media. Evergrande will be able to fully accelerate the resumption of construction and production and achieve the main goal of “ensuring the handover of buildings” in order to provide a “responsible response” to home buyers, investors, partners and financial institutions.

A high mountain of debt

Evergrande has debts equivalent to more than 300 billion US dollars (100 billion euros) accumulated. Investors fear a default. The troubled corporation has to find fresh money to pay banks, suppliers and bondholders on time. As the financial service Bloomberg reported, the group has to make interest payments on two bonds on Thursday of over 100 million dollars. However, a grace period of 21 days applies, which could give Evergrande more time.

Fear of an impending collapse caused Evergrande’s share price to fluctuate sharply again on Tuesday. On the Hong Kong stock exchange, the paper of the group lost at the top by more than seven percent, but caught up again during the day. Since the beginning of the year, the Group’s shares have already lost more than 30 percent.

The US rating agency S&P warned in a statement on Monday that the Chinese government could not assume that the group would be bailed out. Beijing would only be forced to intervene “if there were widespread contagion that would result in the collapse of several large construction companies and pose systemic risks to the economy,” the agency said. A bankruptcy of Evergrande alone would probably not lead to such a scenario, so S&P continues.

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