The property giant has liabilities totalling more than $300 billion after years of borrowing to fund rapid growth
Dozens of anxious investors protested outside the headquarters of troubled Chinese property giant Evergrande Tuesday, after the debt-laden firm conceded it was under “tremendous pressure” and may not be able to meet its repayments.
Evergrande’s plight has raised fears of a contagion across the debt-mired Chinese property sector — which accounts for over a quarter of the world’s second-largest economy — with a knock-on for banks and investors.
The Hong Kong-listed developer has liabilities totalling more than $300 billion after years of borrowing to fund rapid growth.
An estimated 60 to 70 people gathered outside Evergrande’s headquarters in the southern city of Shenzhen, demanding answers from the company.
The anxious investors crowded in front of the building’s entrance as police were deployed to maintain order, according to AFP reporters at the scene.
Our boss is owed over 20 million yuan ($3.1 million), and many people here are owed even more, a man who gave his surname only as Chen told AFP. We are definitely very anxious. There’s no clear explanation right now. They should have paid the money when it was due.
Evergrande was downgraded by two credit rating agencies last week while its shares tumbled below their 2009 listing price, with a barrage of bad headlines and speculation of its imminent collapse on Chinese social media.
On Monday, the company insisted it will avoid bankruptcy.
But on Tuesday, it issued another statement to the Hong Kong stock exchange, saying it had hired financial advisers to explore “all feasible solutions” to ease its cash crunch. The statement warned that there was no guarantee Evergrande would meet its financial obligations.
The firm blamed “ongoing negative media reports” for damaging sales in the pivotal September period, resulting in the continuous deterioration of cash collection by the Group which would in turn place tremendous pressure on cashflow and liquidity.
Shares in the firm dropped more than 11 percent Tuesday, and are down nearly 80 percent since the start of the year.