At least two local governments in China have seized money that the shaky real estate conglomerate China Evergrande Group has received from the presale of homes. That reports the Financial Times on the basis of memos that the British business newspaper has seen. Chinese authorities want to prevent the money from being used for purposes other than housing construction, such as paying off debts.
In a letter, a housing regulator in the city of Guangzhou demands Evergrande transfer the proceeds from the pre-sale of a shut down construction project to an account under government supervision. In Zhuhai, next to Macau, a local housing agency also ordered Evergrande this month to deposit the proceeds into a government account.
Evergrande has a debt burden of about 260 billion euros. Last week, the company missed an interest payment on foreign bonds, but did not openly explain. Bankruptcy is imminent, because installments will also expire next week. Globally, the risk of collapse is causing nervousness among investors. The tightened supervision of the money flows shows that the Chinese government is giving top priority to finishing homes, which have often already been sold.
With the help of large amounts of borrowed money, the company grew into the second largest real estate developer in China. But recently it became clear that that financial position is unsustainable, especially with Beijing imposing stricter lending standards for the debt-laden real estate sector.
Business newspaper: Chinese cities seize Evergrande money
Source link Business newspaper: Chinese cities seize Evergrande money