Evergrande Cautions it Could Default Amid Decreasing Property Sales
Sep 14, 2021 By MarketDepth
Evergrande Group (OTCMKTS: EGRNF), a real estate company, announced that its property sales are likely to decline in September, leading to the possible default of its large debts. Despite the company trying to sell assets to ease the burden, it recently cautioned against its cash crisis, reporting USD300 Million in liabilities. The company’s stock fell 10% during morning trading.
In a move to save money, Evergrande has halted work on various projects. Nevertheless, the issue at hand is expected to affect China’s banking system, the economy and the country’s property sector.
The real estate group revealed Tuesday that there was “no material progress” to convince investors to buy part of its stakes in both electric vehicle and property services businesses.
“If the group is unable to meet its guarantee obligation or to repay any debt when due or agree with the relevant creditors on extensions of such debts or alternative agreements, it may lead to cross-default.”Spokesperson for Evergrande
In a filing with the Hong Kong stock exchange, Evergrande said it anticipates a “significant” fall in sales this month. The company revealed this would cause “the continuous deterioration of cash collection by the Group which would in turn place tremendous pressure on the Group’s cashflow and liquidity.”
“The month of September is typically when real estate companies in China record higher contract sales of properties. However, the ongoing negative media reports concerning the Group have dampened the confidence of potential property purchasers in the Group.”Filing from Evergrande
The company’s stock has fallen 80% throughout the year and has a current market cap of USD5 Billion.