Evergrande’s demise is tied to investor relations

E

Six directors of the shaky Chinese real estate developer Evergrande have paid out the company’s investment products while they were not allowed to do so, Evergrande announced.

The company demands that the six pay back the money. In addition, the real estate developer wants to impose to the six “firm fines”.

The six senior managers had invested money in their own investment product of Evergrande. For this purpose, the company has rules on when they may be paid out. However, the six were paid for that date. These early payments are probably related to Evergrande’s financial position.

Evergrande has been in serious financial difficulties for some time. The company has over $240 billion in debt, and earlier this week it became clear that creditors will not have to count on interest payments this month. Also, for some time it has not been possible to dispose of assets and several of the company’s projects have been shut down, so that Evergrande can not make any profit from them either.

Since the beginning of this year, the market value of Evergrande, which has more than 800 projects in progress in 220 cities, has fallen by three quarters. Investors are afraid of bankruptcy, which could create a domino effect on the Chinese real estate market. Like Evergrande, many companies finance new projects with customers ‘ down payments. This leaves little financial room for maneuver if things go wrong.


By: Maurice Eisma

Maurice Esma, a co-founder of EconomicInform is a freelance journalist with the expertise in international finance and corporate rights. The author can be reached by email maurice.eisma@economicinform.com

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

By Oliver I. Kjeldsen

Recent Posts

Categories

About us

EconomicInform, EconomicInform.com is a product of EconomicInform LLC. We sincerely believe that economics is one of the most interesting and most underappreciated – in terms of getting some enjoyment out of reading the subject articles – sciences. More on that - at the link. Feel free to drop us a line.