Evergrande Races to Restart Projects as Debt Repayments Loom
(Bloomberg) -- China Evergrande Group said it has resumed construction at most of its housing projects as authorities push the debt-laden developer to pay migrant workers and deliver apartments.
Nearly 92% of Evergrande’s property projects have so far restarted, compared with just about 50% at the beginning of September, according to a company statement released Sunday night. The number of workers involved in the projects that have resumed building has risen 31% from September to 89,000.
“As long as we do a good job in restarting work, production and construction, we’ll be able to deliver houses to buyers, resume sales and operations and pay off debts,” the statement cited Chairman Hui Ka Yan as saying at a company meeting.
Evergrande is struggling with more than $300 billion in liabilities as a government campaign to deleverage developers and curb years of housing speculation takes a toll. Already labeled a defaulter after missing coupon payments on two bonds, Evergrande is facing a maturity wall next year and has said it plans to “actively engage” with offshore creditors on a debt restructuring plan.
Concerned that a deepening industry crisis would hurt economic growth and undermine social stability, Beijing has started to ease financing for some developers as well as homebuyers. Evergrande’s overhaul is now being guided by a risk committee that includes officials from its home province of Guangdong.
In a quarterly monetary policy statement released Saturday, China’s central bank pledged greater support for the economy while reiterating its aim to promote the property sector’s “healthy” growth, protect homebuyers’ rights, and better meet housing demand.
Wang Menghui, minister of housing and urban-rural development, said in a weekend interview with state TV that the government will make efforts to stabilize land and housing prices and ensure reasonable demand. Still, he also emphasized that housing policy won’t be used as short-term economic stimulus.
Evergrande must “sprint at full speed” to meet the goal of delivering 39,000 apartment units at 115 projects this month, Hui said in the statement posted online, which carries a picture of him dressed in a gold tie and black suit addressing colleagues. The target is almost four times the firm’s average monthly delivery of under 10,000 units since September, according to the statement.
In an article posted on its WeChat account Monday, Evergrande said that since the start of this month it has been delivering batches of apartments from projects located in 18 provinces, including Guangdong, Guangxi, Gansu, Shandong and Jiangsu. The article carries more than two dozen pictures showing what the firm says are homebuyers taking delivery of apartments at various projects this month.
Evergrande had a combined 778 projects located in 233 cities across China at the end of June, according to the firm’s interim report. The company and many other developers saw a plunge in their home sales in the past few months as demand dried up following mortgage tightening and as developers like Evergrande struggled to pay contractors and suppliers.
Thus far, Hui said, more than 80% of Evergrande’s business partners such as decorators and long-term material suppliers have resumed cooperation with the company.
Besides obligations to banks, suppliers and individual investors in wealth management products, Evergrande has $7.4 billion of local and offshore bonds due in 2022. It faces about $255 million in coupon payments on two dollar notes on Tuesday. Most of its offshore dollar bonds are trading below 23 cents on the dollar.
Shares of Evergrande have tumbled 90% in Hong Kong trading this year. The city’s stock market was closed Monday for a holiday.
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With assistance from Bloomberg