BEIJING—China’s Guangdong province on Friday summoned the chairman of China Evergrande Group after the real estate developer said there was “no guarantee” it would have enough funds to meet debt repayments, while regulators sought to reassure markets.
Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities, fuelling fears of a potential collapse that could send shockwaves through the country’s property sector and beyond.
On Friday, the company said in a filing to the Hong Kong stock exchange it had received a demand from creditors to pay about $260 million. It is already late paying $82.5 million in coupons due on Nov. 6.
“In light of the current liquidity status … there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said, adding that creditors may demand accelerated repayment if it does not.
That prompted the government of Guangdong, where the company is based, to summon Evergrande Chairman Hui Ka Yan.
The provincial authorities said in a statement it would—at Evergrande’s request—send a working group to the company to oversee risk management, strengthen internal controls, and maintain normal operations.
The Guangdong authorities were not the only government entity to wade into the Evergrande issue on Friday.
In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator, and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.
“Evergrande’s problem was mainly caused by its own mismanagement and break-neck expansion,” the People’s Bank of China said.
Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, it said, adding that housing sales, land purchases and financing “have already returned to normal in China.”
The China Banking and Insurance Regulatory Commission (CBIRC) said the Evergrande issue would not affect the industry’s normal operations and it would increase support for guaranteed rental housing.
It added that it believed domestic and overseas regulators would deal with Evergrande-related issues fairly, while the China Securities Regulatory Commission (CSRC) said any fallout for the capital market was “controllable” and it would maintain support for property developers’ funding needs.
In its filing, Evergrande said it intended to actively engage with creditors to come up with a “viable restructuring plan” to deal with its offshore debts.