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Evergrande supplier threatens lawsuit over late payment

Evergrande supplier threatens lawsuit over late payment

FILE PHOTO: An exterior view of China Evergrande Centre in Hong Kong, China March 26, 2018. REUTERS/Bobby Yip

SHANGHAI :Debt-laden developer China Evergrande Group has failed to pay some overdue bills, piping supplier Yonggao Co Ltd said, in the latest sign of a cash crunch at the teetering builder.

Financial markets are worried that the size of Evergrande's debts present a systemic risk were it to fail and the firm's executives last week were issued a rare warning from regulators to get their house in order.

Yonggao now joins a handful of suppliers to threaten or launch legal action over missed or late payments.

In an exchange filing the Shenzhen-listed pipe-producer said it is owed 478 million yuan (US$74 million) in commercial bills, of which 195 million yuan is overdue, that it could sue the developer and that since May it had stopped deliveries.

Evergrande had no immediate response. It had pledged on Friday to do everything it can to resolve its debt issues, but markets appear to remain unconvinced and nervous.

Evergrande shares rose 1.5per cent in morning trade but sit just a fraction above a five-year low touched on Monday.

The developer has more than 240 billion yuan (US$37 billion) of bills and trade payables from contractors to settle over the next 12 months, according to ratings agency S&P Global.

Construction work has been halted on two of its projects in the southwestern Chinese city of Kunming, one of them for overdue payments worth more than 210 million yuan, state media China National Radio said earlier this month.

(US$1 = 6.4710 yuan)

(Reporting by Samuel Shen and David Stanway in Shanghai and Clare Jim in Hong Kong. Writing by Tom Westbrook; Editing by Christopher Cushing and Sam Holmes)

Source: Reuters

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