The electric car division of Chinese conglomerate Evergrande is lagging behind in paying salaries. The bills of several factory equipment suppliers also remain unpaid, reports Bloomberg news agency based on insiders.
This makes it clear that the financially precarious situation within the conglomerate extends beyond Evergrande’s real estate activities.
China Evergrande New Energy Vehicle Group (Evergrande NEV) plans to start selling electric cars on a large scale next year. Still, due to payment difficulties, this business unit is unlikely to meet these targets. Sources tell Bloomberg that most employees are typically paid at the beginning of the month and around the twentieth day of the month.
That second salary payment did not come to some managers in September. Evergrande NEV declined to respond to questions from Bloomberg. Machinery suppliers are reportedly pulling their own mechanics out of their factories because Evergrande NEV defaults on payments.
Evergrande has a debt burden of 260 billion euros. That this situation is untenable became clear when suppliers could no longer be paid. The deadline for interest payments of more than $83 million on a $2 billion loan ends Thursday.
A bankruptcy threatens to send shockwaves to other real estate groups and companies that depend on them. If Evergrande is unable to meet its obligations, it may launch the largest operation in Chinese history to settle with the group and creditors.
