Debt-laden China Evergrande Group, the country's second largest property developer, has pleaded for government support to approve a restructuring plan that has languished for four years, warning it faces a cash crunch that could lead to systemic risks, according to people familiar with the matter.
The company, the most indebted developer in China, made the request in a letter to the government of southern Guangdong province dated Aug. 24, according to three people who confirmed the letter's authenticity.
Evergrande said late on Thursday that a document circulating online about a reorganisation of its subsidiary Hengda Real Estate was a fabrication and defamation, and said it has reported the matter to public security authorities.
Sources said information technology vs computer science letter had asked the local government to support its plan to gain a listing for Hengda on China's A-share market by buying a company that was already listed in Shenzhen. The plan was announced in 2016 but has yet to receive regulatory approval.
It did not spell out exactly what sort of support it was seeking, but urged the local government to pay attention to the matter and help to coordinate some progress on the listing. Evergrande's Hong Kong-listed shares tumbled 5.8% earlier in the day on Chinese online media reports about the request.
Evergrande said in the letter that Hengda must repay 130 billion yuan ($19.05 billion) it raised from investors for the plan. Those funds and a bonus of 13.7 billion yuan must be paid before Jan. 31, 2021, it said.
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