There were chaotic scenes at heavily debt-ridden property developer China Evergrande Group’s headquarters on Sunday, when around 100 disgruntled investors crowded its lobby to demand repayment of loans and financial products, reports Reuters. The incident prompted the company to announce a plan that offers retail investors the choice of three options for repayment from Evergrande’s high-yield wealth management products, according to Caixin.
According to the plan announce by Du Liang, head of Evergrande’s wealth management unit, investors can accept cash installments, property or investors’ payables on residential units they have purchased. “It is difficult for Evergrande to make RMB 40 billion ($6.2 billion) of repayments at once for the wealth management products at this moment,” Du said. Investors can expect returns as soon as Evergrande’s property projects are sold, he added.
According to fund managers and analysts, Evergrande’s struggles to sell off assets and avert defaulting on its RMB 1.97 trillion ($305.3 billion) in liabilities is running the risk of contagion across other privately-owned developers, reports Reuters. The cash-strapped developer said on Tuesday that a significant drop in its property sales would continue this month due to concerns over its debt, which is likely to further deteriorate its liquidity and cash flow.
In a statement to the Hong Kong stock exchange, the group said that it is engaged in discussions with potential investors to sell some of its assets, but it has made no “material progress” so far.