The Evergrande cases

The Evergrande is one of the biggest real estate developer in China. Their revenue
achievements in 2020 amounted to 110 billion US dollars. The Evergrande is one of the 500
largest companies in the world by revenue. Evergrande is a giant property company in China that
it extends to the electric, sport, playground, food and drink. This company claimed that they have
more than 1.300 project in 280 town in China and a pioneer in providing homes with great
decorations.
When the bankruptcy of this company began when they seek to fund their various
businesses. Many people think they are too ambitious with other businesses so that their main
business, the property, is not focused and distracted. “Evergrande Group has strayed far from
their main business, that is partly the source of this mess” CNN, 20 September 2021.
This situation worsened when Beijing implemented changes to regulations. In 2020,
China’s regulators tightened debt management in their property sector. They said is ‘three red
lines’. Three red lines are used to control the amount owed by large real estate decelopers. They
forced the property companies in China to immediately pay off their debt bills. With a lot of debt
and added new regulations, Evergrande finally sold the property with a big discount in order to
maintain their business. Evergrande’s debt is the largest in the world, the value is 300 billion
USD and the interest to be paid amounting to 84 million USD.
The main problem from Evergrande is turned out to be borrowing too much money.
Evergrande is reportedly considering repaying their debt obligations to foreign public
bondholders worth US$19 billion. Payments will be made in cash and equity installments in its
two units listed on the Hong Kong Stock Exchange, namely China Evergrande New Energy
Vehicle and Evergrande Property Service. Unfortunately, the two business units are currently in
the suspension stage until further notice.