China Evergrande has pledged to resume construction of all remaining stalled property projects by the end of this month, as the world’s most indebted developer works to pacify a nationwide mortgage boycott.
The developer will resume the construction of 38 remaining projects by the end of September and accelerate 62 restarted projects to “normal level”, according to a company statement released late on Monday that cited its chair, Hui Ka Yan, in a weekly meeting.
Among Evergrande’s 706 pre-sold projects nationwide that need to be completed and delivered to homebuyers, 668 had resumed construction, it said.
“We have to work hard and put our nose to the grindstone to ensure the delivery of projects. Only in this way can we satisfy the homebuyers, resume sales, resume operations, repay all types of debts and get out of the predicament,” Hui said at the meeting.
Evergrande has been at the centre of a liquidity crisis gripping the Chinese property sector. Cash-starved Chinese developers, unable to sell more debt, have been forced to suspend projects, prompting hundreds of thousands of homeowners to stop making mortgage payments on unfinished properties in protest.
The boycott has come at a critical time for Beijing, ahead of a landmark Communist party meeting in mid-October, and has put pressure on the country’s Rmb367.7tn ($53.1tn) banking system.
To curb the broader economic fallout from the property crisis, Chinese authorities have launched special loan schemes to help support struggling developers.
Zhengzhou, the capital of China’s central Henan province that is most exposed to the mortgage revolt, pledged to mobilise loan resources and policy tools to help restart all stalled property projects in the city before October 6, according to a document detailing the initiative dated September 6 that was seen by the Financial Times.
Evergrande, which defaulted on its offshore debt in December and missed a July deadline to unveil a preliminary plan to restructure its $300bn of liabilities, did not elaborate on how it would secure funding to resume construction. Last week, it said it would sell its remaining stakes in China’s Shengjing Bank for $1.1bn.
Evergrande is under increasing pressure from creditors. Its Hong Kong headquarters has been seized by a receiver probably appointed by lender China Citic Bank International, after the developer twice failed to sell the building to repay a HK$7.6bn ($968.3mn) pledged loan, according to company documents.
Evergrande is also fighting a winding-up petition filed in the Hong Kong courts by one of its creditors, Top Shine Global, which argues the developer did not honour a financial obligation of HK$863mn. The court hearing has been adjourned until November 28.