Business & Economy

Indebted Chinese real estate giant denies founder, president left China

Beijing, Oct 19 (EFE).- China’s largest real estate developer for the last six years denied Thursday that its founder and its president have left China, a day after the company faced for the first time the possible non-payment of offshore debt.

Country Garden denied in a statement that its founder Yang Quoqiang, and his daughter and firm President Yang Huiyan had left the country and warned of “adverse effects” caused by rumors that have spread in the last few days on social media.

According to the company, both are “working normally” in China and Country Garden reserves the right to take legal action to pursue those responsible for “spreading malicious rumors.”

The company faced Wednesday the possibility of incurring its first extraterritorial debt default, which could trigger claims from other creditors by entering a “cross default” situation.

Although early Thursday there was still no official record of a deadline or news that any payment had been made, it is estimated that the company would face the end of the 30-day extension it entered last month after failing to pay some $15.4 million of an offshore bond.

The agency has not confirmed whether it defaulted on that amount and has only said it is looking for a “holistic” solution to its problems.

The developer said last week that it is not able to meet all these obligations on time after suffering “notable pressure” on its sales, which have fallen 44 percent year-on-year in the first three quarters and, for example, also reflect a collapse of more than 80 percent in September data.

This has caused Country Garden to recognize significant liquidity problems, so the next step could be a restructuring of its debt, something that seems likely after the firm announced the hiring of financial advisors and its plan to negotiate with cross-border creditors .

At the end of June, the group had a total debt of about RMB 257.9 billion ($35.31 billion), while the value of the homes it had already sold but had not yet finished building amounted to RMB603.58 billion.

In the first half, the developer lost about RMB48.93 billion.

The financial position of many Chinese real estate companies worsened after, in August 2020, Beijing announced restrictions on access to bank financing for developers that had accumulated a high level of debt, among which Evergrande stood out with a liability of almost $330 billion.

In recent months, given the situation, the government announced various support measures, with state banks also opening multimillion-dollar lines of credit to various developers. EFE


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