China Evergrande Group, the world’s most-indebted developer, has posted a loss of $4.5 billion for the first half of the year. This adds to the company’s previous losses of over $82 billion in the past two years. The company has been struggling amid a housing crisis in China, where the government has been cracking down on the real estate industry to reduce risk and make housing more affordable.
Evergrande’s struggles reflect the challenges faced by many developers in China. Its largest rival, Country Garden Holdings Co., is also on the verge of default and is expected to report a loss for the first half. These results are significant for offshore bondholders as they assess the company’s debt restructuring proposal.
Evergrande has asked its creditors to approve its offshore debt overhaul plan, and meetings will be convened to discuss this on Monday. In April, the company announced that 77% of its Class A bondholders supported the plan, while only 30% of Class C holders endorsed it. These meetings will determine the fate of Evergrande’s debt restructuring.
The company’s financial results were audited by Prism, a small accounting firm that became Evergrande’s auditor in January. However, Prism added a disclaimer of conclusion to the company’s accounts, citing multiple uncertainties. Despite this, Evergrande is hoping to resume trading its shares soon.
Overall, Evergrande’s significant losses highlight the challenges faced by China’s real estate industry. The company’s debt restructuring plan and potential approval could give some relief to its investors and signal a positive direction for the company’s future.
Sources:
- Bloomberg