Hui Ka Yan, the chairman of embattled property developer Evergrande, was summoned by the provincial government of Guangdong late Friday night, after the deeply indebted company warned on the same day that it may not be able to meet its financial obligations.
Hong Kong-listed Evergrande, now close to collapsing under more than $300 billion in total liabilities, sought help from the southern province, according to a short post published via its website. Authorities in Guangdong, where Evergrande is based, agreed to dispatch a “work group,” and help the company “resolve risks, strengthen internal control and sustain its normal operations.”
The Guangdong government also “paid close attention” to Evergrande’s latest warning, the post says. In a stock exchange filing on December 3, the company said it had received a demand to pay creditors in the amount of $260 million.
“In light of the current liquidity status of the group, there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said in the filing.
“In the event that the group is unable to meet its guarantee obligations or certain other financial obligations, it may lead to creditors demanding acceleration of repayment,” the company added.
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Chinese authorities, in the meantime, have been busy issuing statements intended to reassure investors. Regulators at the China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, as well as the country’s central bank, the People’s Bank of China, have all recently published separate statements related to Evergrande.
For example, the central bank said in an online statement that it would work with the Guangdong government and relevant government departments to help resolve risks and promote the “stable and healthy” development of the country’s property market.
“Evergrande’s crisis is mainly a result of its own mismanagement and blind expansion,” the PBOC said in the statement. “The risks of individual companies won’t affect normal market fundraising in the mid to long term.”