Evergrande share price tanks and boss summoned by authorities over debt warning as defaults rise

Ailing Evergrande’s share price has plummeted to its lowest point yet after the company issued a stunning $260 million debt warning.

Evergrande boss Hui Ka Yan was summoned by authorities after the company’s latest debt warning.

Evergrande’s share price has plummeted to its lowest level since the property juggernaut’s debt crisis began in the wake of an alarming debt warning.

The Chinese property juggernaut has been teetering on the brink of collapse for months after racking up staggering debts worth $A420 billion.

On Friday, it revealed via a filing to the Hong Kong stock exchange that creditors had issued a demand for the payment of debts to the tune of $260 million.

The company is already overdue on $82.5 million in coupons which were originally due early last month, with a 30-day grace period on that figure now coming to an end within hours.

Yesterday, Evergrande shares fell to a new record low, closing down 20 per cent at 1.81 Hong Kong dollars.

That represented the stock’s lowest point since it was first listed in Hong Kong in 2009, with Evergrande losing a whopping 87 per cent of its value since the start of the year.

Meanwhile, the billionaire boss of the struggling developer was “summoned” by concerned authorities after the developer announced there was “no guarantee” it could pay its massive debts.

‘No guarantee’ Evergrande can pay up

The latest Evergrande developments have spooked insiders after weeks of relative calm, with the company not mincing its words when it came to just how dire the situation has become.

“In light of the current liquidity status … there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said in the note.

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Evergrande’s slow-motion collapse has hit China's economy. Picture: AFP

According to Reuters, that revelation sparked the government of Guangdong province, which houses Evergrande’s headquarters, to summon its billionaire boss Hui Ka Yan to voice concerns over the news.

Reuters reports that the government confirmed a group would be sent to the company to “oversee risk management, strengthen internal controls and maintain normal operations”.

And late on Friday, China’s central bank, banking and insurance regulator and its securities regulator followed suit, issuing a string of calming statements claiming the crisis facing Evergrande would be contained.

Evergrande says there’s “no guarantee” it can repay its debts. Picture: Brent Lewin/Bloomberg

“Evergrande’s problem was mainly caused by its own mismanagement and breakneck expansion,” the People’s Bank of China said in a statement.

“Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term.”

“The spillover impact of the group’s risk events on the stable operation of the capital market is controllable,” the China Securities Regulatory Commission added.

Meanwhile, Evergrande vowed to work with creditors to develop a “viable restructuring plan” to manage debts.

It comes after Hui Ka Yan had previously been requested to dip into his vast personal wealth to keep the company afloat, with Evergrande also desperately trying to sell off assets in a bid to raise much-needed cash.

New property giant in crisis

However, despite the assurances from Chinese regulators, there are growing signs a dreaded “contagion” is already in full swing, with the fiasco facing Evergrande already spreading within the property sector.

In October, fellow Chinese real estate developer Fantasia missed a payment on a $US206 million ($A282 million) bond that had matured the day before, triggering a default, while another firm, Sinic Holdings, also defaulted on a debt interest repayment that month.

On Friday, Kaisa Group Holdings Ltd warned it might not pay off its $571 million bond due next week.

And now, it seems yet another property giant is in crisis, with developer Sunshine 100 China Holdings Ltd missing payment on $179 million of debt and interest payments due Sunday.

Hui Ka Yan was summoned by concerned authorities in light of the shock announcement. Picture: Paul Yeung/Bloomberg

In a filing, the company said it won’t be able to repay the $170 million of principal and more than $8.9 million of interest on notes due this year.

“Distress among Chinese real estate firms is spreading, amid a debt crisis at giant China Evergrande Group that’s intensifying,” Bloomberg’s Will Mathis and Tiago Ramos Alfaro wrote off the back of the latest development.

“The broader sector strains have pushed yields on Chinese junk dollar bonds – many of which come from the industry – near record highs.

“That’s made it difficult for distressed developers to refinance their maturing debt in the offshore market, which has contributed to a wave of defaults.”