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China debt crunch

Two more suppliers say payments are overdue from Evergrande

Ad group is latest to sue indebted Chinese property developer for missed fees

Advertising company Leo Group has become the latest to take measures to recover funds from Evergrande Group, applying to a Chinese court to freeze 356 million yuan ($55.06 million) of the property developer's assets.   © Reuters

HONG KONG (Reuters) -- Advertising company Leo Group said it is applying to a Chinese court to freeze 356 million yuan ($55.06 million) in assets of Evergrande Group for overdue payments, becoming the latest supplier to sue the indebted property developer.

Leo's lawsuit, which was disclosed in a securities filing late on Monday, comes after Huaibei Mining Holdings said last week its construction unit was suing Evergrande regarding 400 million yuan in overdue fees.

And Langfang Development said last week a court has ordered Evergrande's shares in the company be frozen for three years following a ruling on a lawsuit between Evergrande and an investment company.

Worries over the financial health of China's No.2 developer intensified after it said in June it had not paid some commercial paper on time, and following news last month that a court froze a $20 million bank deposit held by the developer on the request of Guangfa Bank.

Separately, Lets Holding, a construction research and development company, said in a securities filing at the weekend that it was not ruling out taking legal measures to resolve Evergrande's overdue commercial paper of 33 million yuan.

Evergrande did not immediately respond to a request for comment on the filings by Leo Group and Lets Holding.

Rating agency Moody's downgraded Evergrande's corporate family rating by two notches on Monday to Caa1 from B2, and the senior unsecured ratings to Caa2 from B3, following similar action from S&P and Fitch.

The downgrades reflect the firm's heightened refinancing risk over the coming 12-18 months given its weakened funding access and liquidity position, Moody's said.

Shares of Evergrande dropped as much as 4.9% on Tuesday morning in Hong Kong, versus a 1.1% decline in the broader market.

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