Many of China Evergrande’s projects’ escrow accounts are slowly running out, making it impossible to resume construction, according to a source close to Evergrande Chinese-language media, Da Ji Yuan reported. It is usual for a project to have a shortage of several hundred million yuan.
China Evergrande still has a vast capital gap. In the first half of the year, Evergrande Pearl River Delta Company planned to “guarantee the delivery of buildings” for a total of 36 projects in the region, and the corresponding fund demand reached $468.64 million.
However, only $361.7 million of funds were in the local Evergrande project trustee account, so the fund gap amounted to $107 million.
The person close to Evergrande added that the recent cooperation method Evergrande and trust institutions adopted might be debt-to-equity transfer, which means using shares to pay bonds.
On Jan. 13, Evergrande Real Estate Kunming Company transferred 100% equity of Kunming Evergrande Linxi Project Company to Minmetals International Trust Co., Ltd. as Evergrande’s commitment.
The report from Caixin.com said that when China Evergrande was at the peak of a debt crisis, there were many cases of selling assets at a low price without Evergrande’s authorization.
In his address on Feb. 6, Xu Jiayin also stated that selling the company’s assets for a low price is never permitted, as a sold-off asset can not pay debts. Xu also called on all employees in all divisions to use all kinds of methods to promote comprehensive cooperation and win-win work.
According to Sohu, at a meeting on Feb. 6, Xu Jiayin said China Evergrande would hand over about 70 million square meters and 600,000 apartments in 2022.
Up to now, China Evergrande’s undelivered houses have dropped to below 1.3 million apartments. However, Xu Jiayin mentioned in the conference that the target of guaranteeing delivery in 2022 is about 600,000 apartments, almost 50% of the overall number of undelivered houses.
Since May 2021, several projects under China Evergrande have officially stopped work. Then Evergrande set up a special working group to ensure the delivery of buildings in September 2021.
From the second half of 2021, China Evergrande has faced debt pressure from suppliers, financial institutions, home buyers, financial customers, and even internal employees.