Evergrande, a heavily indebted Chinese property developer, has seen its stock plummet after disclosing the magnitude of its financial woes.
The company claims it is having trouble selling assets quickly enough to satisfy its enormous $305 billion (£220 billion) obligations.
The company’s cashflow was also under “tremendous strain,” according to a statement.
The statement came only hours after a swath of irate protestors surrounded the company’s Shenzhen headquarters on Monday.
Evergrande blamed “ongoing unfavorable media stories” for “dampening the confidence of potential property purchasers” in a statement to the Hong Kong Stock Exchange.
In addition, the world’s most indebted property developer said it was working with financial experts to find answers to its difficulties.
In Hong Kong trade on Tuesday, Evergrande shares were down more than 10%. In the previous six months, the company’s stock has dropped by roughly 80%.
Hundreds of investors protested outside the firm’s headquarters on Monday, a rare sight in China. They yelled, “Give us our money back,” as they demanded that the firm repay loans and financial goods.
According to news source Caixin, they were greeted by a large number of uniformed security officers as well as a corporate official who read out a payback proposal.
Evergrande also claimed on Monday that rumors regarding its possible bankruptcy and reorganization were “completely false.”
Why Evergrande’s Woes Are A Clear Sign Of The Future
Evergrande, one of China’s largest real estate developers, has expressed concern about its ability to repay investors.
Rating agencies have frequently downgraded its obligations, which take the form of bonds, due to worries about how it has failed to generate funds to fulfill repayments.
According to some observers, the company’s debt troubles might endanger the financial system of the world’s second-largest economy.
As the company attempts to sell assets rapidly in order to avoid defaulting on its debts, there are fears that other deeply indebted developers may be regarded as vulnerable as well.
Who Are Evergrande?
Hui Ka Yan, a businessman from Guangzhou, created Evergrande, formerly known as the Hengda Group, in 1996.
He used borrowed money to grow the company from a tiny local enterprise to a property behemoth.
According to the company’s website, Evergrande Real Estate has over 1,300 projects in over 280 locations across China.
The company currently includes enterprises ranging from electric vehicle manufacture, media production, and football club ownership to food and beverage companies, in addition to real estate development.
According to business publications, Mr Hui has a personal fortune of about $11 billion.