Editorial StaffAhead of another interest payment deadline, Chinese developer Evergrande announced it will be selling off a $1.5 billion (9.99 billion yuan) stake in Shengjing Bank to a state-owned asset management firm.
The property giant, which is buckling under the weight of more than $300 billion in debt, has been struggling to raise funds as it faces a $47.5 million bond interest payment deadline on Wednesday. The embattled real estate giant also owes payments to banks and suppliers.
In a filing to the Hong Kong exchange on Wednesday morning, Evergrande said that it has entered an agreement to sell the 1.75 billion shares it owns in Shengjing Bank to the Shenyang Shengjing Finance Investment Group, at 5.70 yuan per share. Those shares amount to 19.93% of the issued share capital of the bank.
Evergrande had earlier already disposed of 1 billion yuan worth of shares in Shengjing Bank.
In the statement, Evergrande said that its liquidity problems have already “adversely affected” Shengjing Bank “in a material way.” Introducing the purchaser – the state-owned Shenyang Shengjing Finance Investment Group – will “stabilise the operations” of the bank, Evergrande said.
In a bid to ease its cash crunch, Evergrande is making ongoing efforts to sell off stakes in other assets.
It has sold property units to suppliers and contractors to offset some of its outstanding payments. As of Aug. 27, those outstanding debts amounted to around 25.17 billion yuan ($3.8 billion), according to Evergrande’s latest financial statement.
Evergrande’s shares in Hong Kong jumped nearly 10% in early trading on Wednesday morning.
Another bond interest payment due Wednesday
The troubles of Evergrande came to the fore after it warned twice in September that it may default on its debts. Fears over whether the firm would default roiled global markets – although U.S. stocks rebounded by the end of last week.
Spurce: CNBC
