China Evergrande Group said construction is progressing at some of its residential projects in southern China, as the highly indebted developer tries to stave off collapse and deliver the homes it has promised to more than a million people.
In a pair of social-media posts over the weekend, the property giant said that work has resumed at more than 10 projects in and around Shenzhen, where Evergrande is based, and work on other projects in the Pearl River Delta region near China’s southern coast was being carried out in a “steady, safe and orderly” manner. The developer said hundreds of its building projects had been suspended in recent months.
On Sunday Evergrande posted photographs on China’s ubiquitous WeChat social-media platform showing workers in cities including Shenzhen, Dongguan and Zhongshan laboring away on apartment interiors or at construction sites encased in bamboo scaffolding.
The developer didn’t detail how it was able to restart the projects or finance the work. In August, Evergrande said construction at a number of sites was halted after it delayed payments to suppliers and contractors, and that it was trying to get them to resume work. In some cases, it was paying suppliers with unfinished apartments.
The weekend updates from the company’s onshore property-development business came shortly after Evergrande surprised international investors and dodged a default by making $83.5 million in overdue interest payments on around $2 billion of outstanding dollar bonds, according to a Chinese state-owned media outlet. On Monday, two financial-industry professionals said their Evergrande bondholder clients have received the payments.
To avoid defaulting on close to $20 billion in dollar debt, Evergrande has to make more coupon payments this week before the 30-day grace periods run out. Prices of its stock and bonds indicate global investors expect the company to eventually fail and be restructured, but the construction-resumption announcement suggests Evergrande is still trying to work out its issues.
“This is in line with the government’s priority to protect home buyers’ rights and deliver properties on time,” said Chuanyi Zhou, a credit analyst at Lucror Analytics.
Ting Lu, chief China economist at Nomura, said Evergrande also wanted to show the market that it still wants to honor its debt.
Discussing Evergrande’s problems earlier this month, Yi Gang, governor of the People’s Bank of China, said the rights of creditors should be respected, and that it is especially important to protect the interests of people who have already bought homes.
Evergrande in recent years has been one of China’s largest developers by contracted sales. Many buyers made large down payments on unfinished flats expecting to take possession within a few years.
Evergrande founder Hui Ka Yan spoke Friday at a company meeting on resuming projects, according to Securities Times, the same state-owned media outlet that had earlier reported the dollar-bond interest payments. The company will stop acquiring land and selling unfinished properties, it quoted him as saying, and cut annual apartment sales to less than the equivalent of $31.3 billion within 10 years, from more than $109 billion in 2020.
Mr. Hui also said Evergrande would gradually shift its focus from real estate to producing electric vehicles. That helped spark a 11.4% jump in the Hong Kong-listed shares of its China Evergrande New Energy Vehicle Group Ltd. subsidiary on Monday.
The unit, which once had ambitions of rivaling Tesla Inc., has so far reported anemic sales from its electric-vehicle division and recently also said it was facing a cash squeeze. Its shares are down 87% in the year to date, according to FactSet.
This story has been published from a wire agency feed without modifications to the text
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