China's Evergrande Group vows to maintain operations, market stability

Hong Kong

CHINA Evergrande, the country's most indebted property developer, pledged on Friday to do everything it can to resolve its debt issues and maintain the stability of the real estate market, a day after it was summoned by regulators.

Evergrande issued the statement on its website hours after the People's Bank of China and the China Banking and Insurance Regulatory Commission issued a rare warning that the company needed to reduce its debt risks and prioritise stability.

"Evergrande Group will fully implement the requirements of the interview and unswervingly implement the central government's strategic deployment of the stable and healthy development of the real estate market," the developer said.

The company has been pursing asset sales, with Reuters reporting on Thursday of efforts to offload part of its electric vehicle business.

Evergrande said in its statement that its unit, Evergrande New Energy Vehicle (NEV) Group, had held preliminary talks with smartphone maker Xiaomi regarding it coming on as a strategic shareholder, although there was no in-depth discussions.

The unusual summons by regulators comes amid fragile confidence in China's credit markets and concern that any financial crisis at Evergrande could pose a systemic risk as the company struggles to find the cash it needs to pay its lenders.

It also comes days after Chinese President Xi Jinping highlighted efforts to forestall major financial risks and as a flurry of regulatory crackdowns roil China's equity markets.

Evergrande has more than 240 billion yuan (S$50.4 billion) of bills and trade payables from contractors to settle over the next 12 months, according to ratings agency S&P Global.

Concern over the developer's financial health intensified in June when it failed to pay some commercial paper on time. REUTERS