Chinese real estate Evergrande baffled post lenders claim $2billion in cash

Evergrande, a Chinese property developer, stated on Tuesday that it is investigating how lenders laid claims to deposits worth more than 13.4 billion yuan ($2.1 billion) for its subsidiary, the latest blot against the debt-ridden property giant.

Beijing's push to curb excessive debt in the real estate sector has mired Evergrande, one of the country's largest developers, struggling after racking up $300 billion in liabilities. 

It announced on Tuesday that one of its key units, Evergrande Property Services Group, had approximately $2.1 billion in cash that banks had claimed as for security guarantees through a third party, a discovery made while the company was preparing its annual report. 

The company stated in an announcement on the Hong Kong Stock Exchange that in the review of its financial report for December 31, 2021, it discovered that the relevant banks had enforced deposits of around RMB13.4 billion as security for third party pledge guaranteed. 

The company Evergrande believes that this is a major incident and has established an independent investigation committee to assess the implication of the incident, it added. 

The property subsidiary's other committee will examine the pledge guarantees to its lenders. The statement does not provide a brief on which banks had enforced the pledges. 

This discovery counts to the financial woes of Evergrande, which were declared defaults in December by the international rating firms after it had failed to repay liabilities on time.

The company also added that it wouldn't be able to publish its 2021 audited results by the end of March, as required by Hong Kong's listing rules, blaming the delay on Covid-19.

A separate announcement stated that due to the drastic changes in the company's operational environment since the second half of last year, combined with the effect caused by the Covid-19 outbreak, the company would not be able to complete the audit procedure on time. 

Also, the suspension in its share trading, which had halted Monday, will remain in force until further notice. 

It asked investors to be cautious given the group's operational and financial challenges, particularly the debt pressure it is experiencing. Monday's suspension is the second one this year. 

The company continuously stated it would complete its projects and deliver them to the buyers in a desperate bid to salvage its debts and had urged its creditors to provide the time.

Earlier struggles to pay suppliers and contractors due to the crisis prompted protests from homebuyers and investors in September at the group's Shenzhen headquarters.

Evergrande's problems have resonated throughout China's real estate sector, with some smaller firms also defaulting on loans and others struggling to find sufficient funds.

In late January, the International Monetary Fund warned that the property funding crisis could spill over the broader economy and global markets.
 

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