Indebted Evergrande's project in China halted due to overdue payments

More incidents of late payments by Evergrande have recently been exposed, adding to worries about its financial health.
More incidents of late payments by Evergrande have recently been exposed, adding to worries about its financial health.PHOTO: REUTERS

HONG KONG (REUTERS) - Construction work has been halted on two projects of Evergrande Group in the south-western Chinese city of Kunming, one of them for overdue payments worth more than 210 million yuan (S$44 million), state media China National Radio said on Thursday (Aug 12).

A suspension notice from the construction company - which is owed the money by the debt-laden Evergrande - says it was forced to halt work because of long overdue payment on fees and commercial paper, the radio station reported.

The second project, not by the same construction company, was scheduled to deliver to homebuyers in October, the radio station added, without saying why it was halted.

Evergrande, China's second-largest property developer, did not respond to a request for comment on the Kunming projects.

More incidents of late payments by Evergrande have recently been exposed, adding to worries about its financial health that have intensified with some suppliers and contractors even going to court to freeze its assets.

The central government has ordered the provincial government of Guangdong, where Evergrande is based, to support and assist the group with creditor and strategic investor coordination, financial intelligence provider REDD reported on Wednesday citing four sources briefed on the matter.

The central government highlighted the importance of preventing any systemic risks from emerging during the process, and stressed the importance of stable operations for Evergrande's projects across the country, the report said.

The Guangdong government has invited developers including Sunac China, China Vanke, China Resources Land and China Jinmao to bid and co-develop Evergrande's projects, the REDD report added.

Evergrande has also listed its Hong Kong properties for sale, the report said.

Evergrande did not comment on the REDD report.

The firm said on Tuesday it was in talks to sell certain assets, including stakes in Hong Kong-listed units Evergrande New Energy Vehicle and Evergrande Property Services.

Shares of Evergrande extended losses after China National Radio's report, shedding more than 7 per cent. Shares of Evergrande New Energy Vehicle were down 6.7 per cent, while Evergrande Property Services shares fell 3.6 per cent.