BEIJING (AFP) – A unit of embattled developer China Evergrande Group has failed to repay its loans and must pay a guarantor US$1.1 billion (S$1.5 billion), the company said in a Hong Kong stock exchange filing.
Evergrande has been involved in restructuring negotiations after racking up US$300 billion in liabilities in the wake of Beijing’s crackdown on excessive debt and rampant speculation in the real estate sector.
The announcement comes after the company failed to publish a “preliminary restructuring proposal” by the end of July, despite assuring creditors that it was on track to meet the deadline.
Evergrande said on Friday (July 29) it had made “positive progress” in its restructuring process, floating the potential use of equity in its offshore subsidiaries to repay bond holders but falling short of providing concrete details.
On Sunday, the company said subsidiary Evergrande Group (Nanchang) had failed to fulfil its debt obligations to an unnamed third party.
Evergrande Nanchang had provided counter-guarantees in the form of a pledge of 1.3 billion shares in Shengjing Bank that it held, according to the filing.
“As the borrowers failed to repay the loans, the applicant carried out its obligations under the guarantee and claimed against the subsidiary,” it said.
Evergrande, the world’s most indebted developer, has in recent months scrambled to offload assets, with chairman Hui Ka Yan paying some of its debts using his personal wealth.
It has since found a potential buyer for its Hong Kong headquarters, according to media reports.
Evergrande’s woes are emblematic of the problems rippling across China’s massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash.
With developers strapped for finances and projects stalling, furious home buyers in dozens of cities have also begun refusing to pay their mortgages.