China Evergrande Group has blamed a “drastic change” in the company’s prospects for a delay to publishing its annual results but has promised investors that it will reveal how it plans to restructure its massive debts of $300bn by the end of July.
Evergrande, which has been kept alive by government-run rescue operation since it defaulted on $22.7bn worth of overseas debts in December, saidaudit work would not be completed by the 31 March deadline. It promised to “further enhance communications” with investors.
The turmoil at the stricken company was underlined when it also announced its property services unit had discovered a $2bn hole in its accounts.
Evergrande said it had launched an investigation into how banks had seized the cash, which had apparently been pledged as security for third party guarantees without the property services unit’s knowledge. It described the problem as a “major incident”.
The seizure of the funds, which the property services unit discovered when it was preparing its annual report, underscores the turmoil at Evergrande, which said it would hire King & Wood Mallesons as an additional legal adviser.
It will also increase fears among foreign creditors that they will never see their money.
Tim Symes, insolvency and asset recovery partner at the international law firm Stewarts, said the seizure of the cash by local banks would have repercussions for confidence in investing in China.
“This significant development will feed the concerns by international bondholders that their interests will be subordinated by domestic interests,” he said. “What doesn’t help is the lack of information coming out to the international bondholders, hampering the ability to report to investors on the present situation and the
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