Debt-stricken Chinese firm Evergrande unable to issue new bonds

By Emre Aytekin

BEIJING (AA) - Evergrande, a Chinese real estate firm facing a debt crisis, is reportedly not being allowed to issue new debt bonds to regulate its payments.

Evergrande's notification to the Hong Kong Stock Exchange said the China Securities Regulatory Commission and the National Development and Reform Commission put “administrative measures” on the company's debt restructuring plan.

The notification said the company will not be able to issue new debt bonds due to measures taken by Chinese authorities under an investigation into the company's main subsidiary, the Hengda Real Estate Group.

Following the announcement, during the day the company's shares fell 24%.

Evergrande announced to the stock exchange on Aug.16 that Hengda was being investigated for suspected violations of information-sharing rules.

Some employees in the company's asset management unit were reportedly detained by police.

The company is also facing numerous lawsuits from creditors over debts amounting to 12.6 billion yuan ($1.7 billion).

Evergrande, one of China's largest companies and one of the world's largest investors in the construction industry, has failed several times in the past two years to pay its maturing foreign debt bonds.

The company, which defaulted on its debts, filed for bankruptcy protection in the US on Aug. 17.

*Writing by Gokhan Ergocun from Istanbul