Mid-sized Chinese construction company Evergrande Group on Friday said its subsidiary owes $83 million in loans to an undisclosed lending institution and it failed to make a loan payment deadline.
The problems at Evergrande Commercial Holding’s Mainland unit cast a shadow over China’s beleaguered commercial real estate market, which is suffering from a slowdown in residential sales after a boom last year.
Evergrande’s difficulties came just a few weeks after debt-laden property group Dalian Wanda Group was reported to be in trouble after it skipped a payment on a $1.5bn unsecured loan to Industrial and Commercial Bank of China.
Evergrande’s troubles coincided with a surprise move by China to devalue its currency, which many analysts said had been aimed at manipulating the prices of domestic companies that make large debts overseas.
For an individual, the $83m due on the loan may be considered a drop in the ocean. For companies that combine development with commercial operations, such as Evergrande, there is some cause for alarm.
Evergrande chairman Wu Xiaohui told the Xinhua news agency on Friday that the group plans to restructure its main division in mainland China.
Shares in Evergrande fell nearly 8% in Hong Kong on Friday.