Evergrande CEO Says Chinese Company Will Rise From “Darkest Moment” As Stocks Drop to Decade Low
The Evergrande Group, China’s second-largest property developer, had its stock open at 33 cents on Tuesday, a 10-year low, as the business prepares to default on its $89 billion in debt.
Despite Evergrande’s bleak outlook, Hui Ka Yan, the company’s chairman, sought to boost employee morale by writing a letter to Evergrande employees expressing his optimism that the troubled real estate behemoth would “walk out of its darkest time,” according to Reuters.
On Forbes’ 2021 billionaires list, the 62-year-old chairman is ranked 53rd, making him China’s 10th richest person. Hui, on the other hand, stands to lose the most: as the company’s creator, he holds more shares than anyone else.
Hui informed staff that officials at all levels of the company were striving to tackle Evergrande’s challenges, hoping to gain support as the company faced investor reaction.
In a letter obtained by Reuters, Hui said, “I fully hope that with your united effort and hard work, Evergrande will walk out of its darkest moment, resume full-scale developments as soon as possible.”
He did not specify how this would be accomplished, according to the newswire.
In the Chinese economy, Evergrande is a focus point. Consumer products, electric vehicles, healthcare services, and video production units are just a few of the industries in which the corporation operates. It employs about 200,000 people directly, but the business says that its operations generate over 3.8 million employment annually.
As China’s economy has continued to rise in recent years, Evergrande found itself in this scenario by electing to take out loans to expand its business activities. Now, the company’s worth is tied to real estate projects, some of which it can’t afford to execute. Evergrande is unable to repay its numerous loans due to a lack of cash reserves.
The once-dominant corporation will face its toughest test on Thursday, when it must pay out over $83 million in interest on a bond due in March 2022. Should it be able to make that payment, it will shortly face another challenge in the form of a separate loan payment of over $47 million due September 29.
A potential Evergrande collapse has been linked by some in the financial sector to the collapse of Lehman Brothers, America’s once-fourth-largest bank. This is a condensed version of the information.