Evergrande said it could not meet the March 31 deadline to publish its defaulted 2021 audit results due to sluggish prices and activity in China’s vast real estate sector.
One of its units, Evergrande Property Services, said some lenders unexpectedly charged approximately 13.4 billion yuan ($ 2.1 billion) in bank deposits pledged as “third-party guarantee” collateral.
It did not specify who the lender was, only said that the bank controlled the cash. The real estate services sector said it would establish an independent committee for the investigation.
Real estate developers are one of China’s largest companies with over $ 300 billion in debt, including approximately $ 19 billion of unpaid offshore bonds held by international asset managers and private banks on behalf of their clients. I am.
Evergrande has been declared by Fitch Ratings to be the default in December. According to rating agencies, the downgrade was made to reflect the inability to pay interest on $ 2 bonds.
In 2020, Beijing began cracking down on excessive borrowing by developers to curb high leverage and curb runaway home prices. However, problems in this sector expanded significantly last fall when Evergrande began urgently alerting the market to liquidity issues.
There is now evidence that the Chinese government is playing a leading role in leading the Evergrande Group through debt restructuring and business expansion.
However, some of the company’s international creditors have lost patience.
In January, a group of foreign bondholders threatened to take legal action on an “opaque” debt restructuring process. They said they would “seriously consider enforcement measures” after Evergrande had virtually no involvement in the restructuring of the business.
Evergrande will have to pay another interest on Wednesday.
“The audit work hasn’t been completed yet,” the company said in an exchange document, saying that “significant changes” in the operating environment and the Covid-19 pandemic delayed earnings preparation. After the audits are complete, they will be published “as soon as possible”, it said.
Other major developers are also struggling to meet the March 31 deadline.
Sunac China and Shimao China, ranked 3rd and 12th in real estate sales last year, said they needed to delay the release of their annual financial results on Monday as well. Covid-related restrictions such as quarantine and travel bans were cited to postpone the audit process. Last year, Ronshine China, which was in the top 30 developers, also said it would not be able to submit audit results by March 31st. The former auditor has resigned, according to an exchange submitted by the company on Monday. Ronshine China said it would hire a new auditor later that day and publish the audit results “as soon as possible”.