REUTERS
September 29, 2021 at 11:15 JST
The apartment building developed by Evergrande Group in Guangzhou. Its lower floors are seen covered by sheets on Sept. 15. (Ryo Inoue/ The Asahi Shimbun)
HONG KONG--Cash-strapped China Evergrande said on Wednesday it plans to sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank Co. Ltd. to a state-owned asset management company as it scrambles to raise funds.
Shengjing Bank had demanded that all net proceeds from the disposal be applied to settle the relevant financial liabilities of the group due to Shengjing Bank, Evergrande said.
That requirement suggests that Evergrande, which missed a bond interest payment last week, will be unable to use the funds for other purposes such as another interest payment to offshore bondholders of $47.5 million due on Wednesday.
The payment deadline is being closely watched by investors as the developer’s next big test in public markets.
Evergrande has rapidly become China’s biggest corporate headache as it teeters between a messy meltdown with far-reaching impacts, a managed collapse or the less likely prospect of a bailout by Beijing.
The 1.75 billion shares, representing 19.93 percent of the issued share capital of the bank, will be sold for 5.70 yuan apiece to Shenyang Shengjing Finance Investment Group Co. Ltd., a state-owned enterprise involved in capital and asset management, China Evergrande said in a filing to the Hong Kong bourse.
Shenyang Shengjing’s stake in the bank will be increased to 20.79 percent after the deal to become the bank’s largest shareholder.
“The company’s liquidity issue has adversely affected Shengjing Bank in a material way,” Evergrande Chairman Hui Ka Yan said in the statement.
“The introduction of the purchaser, being a state-owned enterprise, will help stabilize the operations of Shengjing Bank and at the same time, help increase and maintain the value of the 14.75 percent interest in Shengjing Bank retained by the company.”
Beijing is prodding government-owned firms and state-backed property developers to purchase some of embattled China Evergrande Group’s assets, people with knowledge of the matter told Reuters this week.
Its stake in the bank would be reduced to 14.75 percent from 34.5 percent.
China Evergrande default fears haunt investors as Beijing stands back, for now
September 21, 2021
Evergrande to make bond coupon payment, easing market jitters
September 22, 2021
China Evergrande bondholders in limbo over debt crisis
September 24, 2021
Evergrande puts small investors first as debt deadline looms
September 23, 2021
EXPLAINER: Chinese builder’s debt struggle rattles investors
September 21, 2021
China’s house of cards: Evergrande threatens wider real estate market
September 15, 2021
Here is a collection of first-hand accounts by “hibakusha” atomic bomb survivors.
A peek through the music industry’s curtain at the producers who harnessed social media to help their idols go global.
Cooking experts, chefs and others involved in the field of food introduce their special recipes intertwined with their paths in life.
A series based on diplomatic documents declassified by Japan’s Foreign Ministry
A series about Japanese-Americans and their memories of World War II
