Beijing, Dec 7 (EFE).- Shares of the highly indebted Chinese property developer Evergrande rebounded at the start of trading on the Hong Kong Stock Exchange on Tuesday following an announcement of the creation of a risk management committee to mitigate and eliminate future risks.

"In view of the operational and financial challenges the Group is facing, the board of directors of the Company (the Board) resolved to establish a Risk Management Committee of China Evergrande Group (the Committee)," Evergrande said in a Monday night statement.

"The Committee is not a Board committee but it will play an important role in mitigating and eliminating the future risks of the Group," it added. "The Board believes that the experience of the Committee members, as well as the resources they would be able to utilize will be beneficial for the Group to overcome the challenges it currently faces."

The risk management committee will include Evergrande founder and chairman, Xu Jiayin, legal advisers and representatives of state-owned companies.

The conglomerate's shares had risen 4.97 percent at 10:20 am on Tuesday following the announcement.

However, Evergrande is still far from recovering from its slump at the stock market on Monday, when its shares plunged by 19.6 percent to an all-time low after the group acknowledged last week that it may not be able to meet all its debt repayments and will negotiate a restructuring plan with its offshore creditors.

After weeks of relative calm for the conglomerate, alarms sounded on Friday night after Evergrande said in a statement that "there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations" amounting to approximately $260 million.

The property developer also expressed its "plans to actively engage with offshore creditors to formulate a viable restructuring plan of the Company's offshore indebtedness for the benefit of all stakeholders."

Shortly after the release of the statement, the authorities of the southeastern province of Guangzhou, where the company is based, announced that they would assign a working group to Evergrande to resolve its risks effectively.

On Monday night, Evergrande was facing the end of a 30-day grace period to pay a total of $82.5 million in coupons on two offshore bonds.

Although it has not yet made any announcement in this regard, a default on any of its offshore debt obligations could trigger cross default, where a default triggered in one situation may spread to other obligations.

Following the statement by Evergrande on Friday, The People's Bank of China issued a statement saying that Evergrande's risk was mainly caused by poor management and over-expansion, and that the short-term risks of an individual developer will not impact the middle-to long-term financing in the market.

China's banking and insurance regulator also emphasized that the developer's spillover risk was controllable.

Some commentators also point out that Evergrande's stock rally on Tuesday is part of general gains made by developers after the Communist Party of China moderated its language on the sector at a major domestic economic summit, which some interpret as the sign of a possible relaxation of Beijing's restrictive policies.

Evergrande has a liability of more than $300 billion while the value of its shares has plummeted by more than 86 percent so far this year. EFE

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