Cash strapped Chinese property giant Evergrande battles $300bn in liabilities
Chinese property giant Evergrande has admitted it is under “tremendous pressure” not even a year after its $1.8bn Hong Kong stock exchange float.
The beleaguered firm is battling more than $300bn in liabilities, following years of borrowing to fund its rapid expansion.
The property group achieved the lower end of expectations, raising $1.8bn from the highly anticipated IPO in November, which came while it was already heavily indebted.
Evergrande had been searching for cash amid a crackdown on excessive borrowing in China’s property development sector, which has seemingly not improved.
The group was downgraded by two credit rating agencies last week, while local reports swirled of its potential collapse.
Evergrande has denied rumours that the business is about to fold, but said it is facing “unprecedented difficulties” on Monday.
Earlier today, however, the property giant announced that it has hired financial advisers to help it explore “all feasible solutions” to avoid bankruptcy – but warned that there is no guarantee that it will meet its financial obligations.
However, the firm hit back at the “ongoing negative media reports” for denting its sales during the September period, “thereby resulting in the continuous deterioration of cash collection by the Group which would in turn place tremendous pressure on the Group’s cashflow and liquidity”.