Evergrande is one of the 500 largest companies in the world. Its main focus is in the real estate sector, however, it has a great diversification in other types of businesses. Its investments have been destined to theme parks, soccer teams, and academies, among others.
Currently, this company is in crisis, because, to achieve the previously mentioned diversification, it resorted to several million dollar loans.
Nevertheless, the shares of the Chinese company, Evergrande Group, the world’s most indebted real estate developer, rose on Friday. After it managed to delay the payment of its bonds, and despite a 0.2% decline in the Hang Seng Mainland Properties Asian index, Evergrande raised the value of its shares by 1.2%.
This happened thanks to onshore bondholders agreeing to Evergrande delaying their payment, while other companies in the same market are rushing to avoid defaults.
On Thursday, Evergrande’s bondholders and management reached an agreement to extend the margin for six months. The total value to be paid is 4.5 billion yuan ($707.52 million).
Kington Lin, managing director of the Asset Management Department of Canfield Securities Limited, said, “the approval was expected; bondholders would not want to break up with Evergrande now because they hope the problem could be resolved eventually”.
The Chinese company has problems with $300 billion in liabilities, including $19 billion in international bonds which missed a payment deadline last month.
Evergrande is working to avoid a technical default in the country, which would make its political restructuring more complicated.
Would you invest in shares of this company? Do you think Evergrande will manage to recover from this crisis?
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