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| CromaConcept/Pixabay |
Chinese real estate giant Evergrande is soooo (just picture our fingers super close together) close to imploding under its own weight.
What's Going On?
The firm is currently $300 billion in debt and had recently warned investors that to recover from the current mess, default on repayment of due interest/principal is now inevitable.
When this news of the company's runaway debt went viral, investors thronged the company’s Shenzhen headquarters late last week demanding money they’re owed from Evergrande.
When this news of the company's runaway debt went viral, investors thronged the company’s Shenzhen headquarters late last week demanding money they’re owed from Evergrande.
With over 200k employees and 1,300+ developments across China, the firm is also facing angry mobs consisting disgruntled homebuyers and employees who fear that the Chinese housing market could now collapse, resulting is massive wealth erosion and an ensuing chaos.
Has This Ever Happened Before?
Has This Ever Happened Before?
Some are seeing echoes of US bank Lehman Brothers’ bankruptcy 13 years ago, though that hasn’t happened yet. A different set of experts feel the comparisons to Lehman Brothers are hallucinatory in nature and that the Chinese government will probably step in to prevent Evergrande from triggering a free-for-all.
Per this latest report, Evergrande, in a last minute effort to steer investors away from cash repayments, is offering deep discounts on its property assets.
😲 Investors, in lieu of the money owed to them can now invest in residential housing units at a 28% discount, offices at a 46% discount, and stores and parking units at 52%.
If cash is the need of the day, investors can choose to be repaid 10% of their principal and interest every quarter, with full repayment in two and a half years.
If cash is the need of the day, investors can choose to be repaid 10% of their principal and interest every quarter, with full repayment in two and a half years.