As Crypto Currencies Slump, China Summons Evergrande Founder – TheWestNews

The government summoned Evergrande’s founder after the company said it might not be able to meet its financial obligations.

China Evergrande has struggled to meet its obligations, raising concerns about the entire property sector, which accounts for a large part of the world’s second largest economy.

Following the Evergrande announcement, Bitcoin fell 1.68 percent to $55,456.

Evergrande warned on Friday evening that given its current liquidity situation, “no guarantee that the group will have sufficient funds to continue to perform its financial obligations.”

Later, Guangdong’s provincial government said it “immediately summoned (founder) Xu Jianyin and … agreed to send a working group to Evergrande Real Estate Group to supervise and promote enterprise risk management.”

Several real estate companies have gone bankrupt in the last year as Beijing tightened regulations on speculation and leverage, cutting off a vital cash flow source.

Evergrande, China’s second-largest developer, has avoided default so far, but challenges remain.

According to Bloomberg, an Evergrande unit has $82.5 million in bond coupons due Monday.

Last Friday, founder Xu sold 1.2 billion Evergrande shares for $344 million, reducing his stake from 77 percent to 68 percent.

Regulators in Beijing have urged the tycoon to use his personal wealth to help Evergrande.

Also on the same day, its auto unit said it had returned undeveloped land worth $1.2 billion and is in active talks with buyers to sell some assets.

Due to stricter home buying rules and a liquidity crisis affecting some of China’s largest developers, the property sector has cooled in recent months.

China’s central bank said Friday that Evergrande’s risks stem from poor management and reckless expansion.

In the medium and long term, the risks of individual real estate companies will not affect market liquidity.

Kaisa Group, another Chinese developer, said Friday it had failed in a bid for a crucial debt swap.

Kaisa announced last month that it would postpone the repayment of some of its bonds in exchange for at least $380 million in cash.

But the offer fell short of the required 95% bondholder approval.

The firm said Friday it will look into solutions “including but not limited to renewal and extension of borrowings and disposing of assets.”

But “there is no guarantee” it will be able to repay its existing notes. It also said $400 million in dollar bills are due Tuesday.

Delaying or failing to repay principal on the notes could result in cross-default on other debt.

With Chinese developers struggling to pay their debts, Beijing has softened its stance on the massive property market.

Chengdu, in the southwest, announced last month that it would ease restrictions on companies selling property, becoming the first to do so.