To mark the completion of a residential complex called World City, the indebted property giant China Evergrande Group held an elaborate red carpet ceremony on Monday, with eight cannons firing off confetti before a cheering crowd. The company then released a series of images featuring newly completed buildings covered with bright red decorations.
Just weeks earlier, Evergrande had been declared in default. The developer has unpaid bills in excess of $300 billion and has struggled to pay back its creditors and business partners. Some in China saw the company’s celebrations as premature.
For months, Evergrande could not pay its builders, painters and contractors. The company, whose problems have made investors wary of China’s once-flourishing property sector, remained relatively silent as its debt problems led to panic in global markets and among people around the country who had purchased apartments before they were completed.
Construction on more than a million homes stalled, and then, two weeks ago, Evergrande signaled it could no longer go on — officially entering into default after failing to make a final debt payment to foreign investors. Now, the developer has pledged to start paying its workers again and to deliver homes, part of a push to restore confidence in the company and the sector.
“We will sprint at full speed,” Xu Jiayin, Evergrande’s billionaire founder, told top executives on Sunday, according to a statement. He did not provide any details about where the money would come from, nor did he say anything about the failure to pay foreign creditors.
Despite the company’s bullishness, the challenges it faces remain enormous. Some home buyers say they are still in the dark about their unfinished apartments. Former employees and contractors continue to wait for back payments. Dozens of lawsuits from business partners that have piled up in court remain unresolved. Property sales across China, meanwhile, have fallen for five consecutive months.
A few weeks ago, government technocrats stepped in to help steer the company. The head of China’s Ministry of Housing and Urban-Rural Development said last week that Beijing was committed to “guaranteeing home deliveries, protecting people’s livelihoods and maintaining social stability.” With just a few days left in the month, Mr. Xu pledged on Sunday to deliver 39,000 apartment units by the end of the year.
The company has also said that it has restarted partnerships with more than 80 percent of its long-term suppliers of materials, and indicated that it would soon be able to repay its debt …….