The founder of the indebted Chinese real estate giant Evergrande (HK):3333), Xu Jiayin, again promised that the group will pay its debts after it breached a self-imposed limit to submit its restructuring plan before the end of 2022, local media reports.
“2023 is a crucial year for Evergrande to fulfill its obligations as a company (…). I believe we can fulfill our mission to deliver (projects), pay off various debts, eliminate risks and start a new chapter of survival as long as we all work together and do not give up when it comes to resuming construction, sales and operations,” Xu said in a letter to employees quoted last night by the Hong Kong newspaper South China Morning Post.
In the letter, the executive indicated that in 2022 it completed 732 projects and delivered 301,000 homes, meeting its objectives for the year.
Although Xu did not offer a turnover figure for the year, sales agreed between January and November reached about 29,120 million yuan (4,221 million dollars, 3,996 million euros), far from the 735,000 million yuan (106,551 million dollars, 100,870 million euros) that had achieved in 2020.
Evergrande, which in mid-2021 accumulated a liability of about 300,000 million dollars and incurred the default of its bonds, said in December that the “differences” with the parties involved in the preparation of its restructuring plan “were narrowing”.
The company is engaged in a campaign to divest assets by making as much money as possible while its shares in Hong Kong remain frozen since March last year after losing almost 90% of their value since the beginning of 2021.
After failing to meet its financial obligations, Evergrande incurred a situation of ‘cross-default’, in which the default towards a single creditor is enough for others to claim the repayment of their loans.
Precisely one of its creditors, who was trying to recover about 110 million dollars, filed in June 2022 a liquidation petition against Evergrande before the Hong Kong Justice, whose next hearing is scheduled for March 20.
The financial position of many Chinese real estate companies worsened after Beijing announced restrictions on access to bank financing for developers who, like Evergrande, had accumulated a high level of debt for years supporting their growth in aggressive leverage policies.
In recent weeks, faced with the crisis in the sector, the Government has changed its tone and announced various support measures, with state banks also opening multimillion-dollar credit lines to various developers.