Monday, June 24, 2024

Chinese conglomerate Evergrande reported a loss of $113 billion over two years


Chinese real estate giant Evergrande on Monday reported a net loss of more than $113 billion in 2021 and 2022 and debt of about $340 billion.

In a statement, Evergrande said the loss “reveals the existence of material uncertainties, which may cast doubt on the group’s ability to continue.”

The company, which was China’s largest real estate developer, was revealed in 2021 to be saddled with more than $300 billion in debt, leading to a nationwide real estate crisis with global ramifications.

Trading in the company’s shares listed on the Hong Kong stock exchange has been suspended since March 2022.

Evergrande announced that it would not be able to release its 2021 audit results by the deadline required by Hong Kong listing rules, citing a “large number of additional audit procedures” and the Covid-19 pandemic for the delay.

The company said on Monday it expects a net loss of 686.22 billion yuan ($95.7 billion) in 2021 and 125.81 billion yuan in 2022, according to the results of its delayed review, which it sent to the Hong Kong stock exchange and could bring it closer. To resume trading.

In 2021, Evergrande announced that its total debt had risen to 1.97 trillion yuan and warned of default risks.

The unaudited results for 2022 show that the group’s total liabilities grew to 2.44 trillion yuan in December 2022, meaning it is still facing difficulties repaying its debts despite selling many of its subsidiaries.

Evergrande unveiled a long-awaited restructuring plan this year that will give lenders the option to swap their debt for new bonds issued by the company and stake in two of its subsidiaries.

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“The start date of the restructuring is expected to be October 1, 2023, and the completion date is December 15, 2023,” it said on Monday.

China’s real estate sector has been in turmoil, with major developers – including Evergrande – failing to complete housing projects, sparking protests and customers defaulting on their loan payments.

The company has become the epitome of a wider crisis in China’s real estate sector, which accounts for a quarter of GDP.

Meanwhile, small businesses have defaulted on their loans and others have had problems raising money since the government imposed strict limits on lending in 2020.

In November, the China Banking Regulatory Commission and the central bank released new measures to promote the “sustainable and healthy growth” of the real estate sector.

These measures include loan support for over-indebted developers, financial assistance to ensure completion of projects and assistance in deferring loans to home buyers.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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