The doom loop continues for Evergrande:
Two more companies said China Evergrande Group failed to pay its bills on time, adding to signs of a cash crunch at the world’s most indebted developer.
Huaibei Mining Holdings Co Ltd. filed a lawsuit against Evergrande in Anhui province, alleging a unit of the company missed payments, according to a filing to the Shanghai stock exchange. The company is demanding about 401 million yuan ($62 million) for fees and breach of contract. Another company, Peace Tree Wood Ltd., said Evergrande missed payments on 2 million yuan of commercial bills.
Evergrande’s suppliers are increasingly resorting to publicizing their beefs with the developer to seek payments, a trend that may spark further investor concern about the company’s financial health. Equity and bond holders have been rattled in recent weeks by a slew of reports about wary banks and unpaid bills. Evergrande’s credit rating was cut by S&P Global Ratings and Fitch in recent days.
“The spate of lawsuits over debt payments faced by Evergrande suggests that the company is now facing liquidity issues,” said Chang Wei Liang, a macro strategist at DBS Bank Ltd. in Singapore. “Not every creditor will be willing to go to court for now, but a flurry of lawsuits could trigger a scramble by creditors to protect their interest.”
And the stress rises!
Remember that this firm sits at the centre of 70% of Chinese steel demand.