What Default? With Confetti and Fanfare, Evergrande Says It’s Ready to Build.
Mr. Cao, an Evergrande home buyer who requested The New York Times use only his surname for fear of being visited by the police, said he had put a down payment on a $160,000 apartment in Jiangxi Province that was nearly completed and was supposed to be delivered in January. He doesn’t expect the apartment will be done in time because there are only around 20 workers each day on the construction site, he said.
Understand the Evergrande Crisis
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How much does it owe? Evergrande has more than $300 billion in financial obligations, hundreds of unfinished residential buildings and angry suppliers who have shut down construction sites. Things got so bad that the company paid its overdue bills with unfinished properties and asked employees to lend it money.
How did the company get into financial trouble? For decades, China’s real estate market operated unrestrained. But recently, Beijing started taking measures, including new restrictions on home sales, to tame the sector. Evergrande borrowed heavily as it grew and expanded into new businesses, and eventually ended up with more debt than it could pay off.
How has the Chinese government addressed the crisis? Beijing sat on the sidelines for months as Evergrande neared financial collapse. It wasn’t until December that the company said officials from state-backed institutions had joined a risk committee to help restructure the business.
Where do things stand with Evergrande now? For months, the real estate giant averted default by making 11th-hour payments on its bonds. But on Dec. 9, a major credit ratings firm declared Evergrande in default after it failed to meet a payment deadline. What is next for the company, bankruptcy, a fire sale or business as usual, has yet to be determined.
“I think the contractors still haven’t been fully paid,” he said. “If they had the money, they should have worked faster for sure.”
Amid the uncertainty, Evergrande’s colorful founder, once known for wearing a flashy gold-buckled Hermès belt, has been largely absent from public view. In early September, he posed behind top executives signing a “military order” pledging to deliver homes. (Over the following months, Evergrande would finish less than 10,000 units.) In a memo leaked later that month, he promised employees they would soon “walk out of the darkness.”
Last week, Evergrande published new photographs of Mr. Xu presiding over a meeting during which he called on executives to keep delivering homes. Then came dozens of photos of suddenly completed apartment projects. Home buyers were photographed happily signing documents that would allow them to finally take possession of their long-awaited apartments.
Some online commentators expressed disbelief that Evergrande could suddenly go from the brink of collapse to business as usual, or bristled at the idea that buyers should celebrate receiving the homes for which they had already paid.
“Today people become so grateful and feel they owe the developer a big favor,” remarked Michael Yu, a popular influencer on Douyin, the Chinese version of TikTok. “What happened to people’s bottom line these days?”
Article source: https://www.nytimes.com/2021/12/31/business/china-evergrande-default-publicity.html