What’s new: The Guangdong provincial government dispatched a working team to China Evergrande Group’s office in Guangzhou to study the company’s financial condition and help with risk disposal, Caixin learned from people close to the matter.
Evergrande management was told to report directly to the working team. Evergrande’s vice president and auto business chief Xiao En is in charge of the company’s daily operations.
The provincial government is collecting information about Evergrande executives’ guarantees for the company’s debts. Caixin learned that many executives offered personal guarantees for Evergrande obligations.
The government also ordered Evergrande to halt asset disposal Dec.12 to assess the company’s finances and assets. Urgent cases must be reported and will be studied specifically, a company source said.
The context: The Guangdong government said in early December it would send a working team to the indebted developer to help defuse its debt crisis. The move came shortly after Evergrande warned of a default on a $260 million debt guarantee obligation and marked a key step toward a restructuring of the debt-laden conglomerate.
Days later, Evergrande said it set up a risk management committee to assess the group’s financial situation and come up with an asset disposal plan for government approval.
China’s central bank Governor Yi Gang Dec. 10 reiterated that Evergrande’s crisis will be dealt with in a market-oriented way, another signal that Beijing won’t tolerate massive debt buildups that threaten financial stability.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (hello@caixin.com)
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