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Evergrand suspended its share trading in Hong Kong on Monday as the world’s most indebted real estate developer prepares for a potential sale of its property management unit.
Evergrand Property Services Group has also stopped trading in its shares, filing a stock exchange claim that the move comes ahead of a “possible general offer” for its shares, without disclosing a buyer.
The company is rushing to sell assets to improve its financial position after missing payments on offshore bonds last month, raising expectations of a massive restructuring process.
The group’s asset management unit, which was listed in Hong Kong in December and had a market capitalization of HK $ 55bn (US $ 7.1bn) before the trading suspension, is Evergrand’s most significant asset, in addition to hundreds of development projects in China.
Shares of Hopson Development, a Hong Kong-based developer based in Guangzhou, were also suspended on Monday “pending the release of an announcement (s) regarding a major transaction by the company.” Mainland Chinese media reports that it will buy a majority stake in Evergrand Property Management Subsidiary.
As the Hopson bond matured in 2023, the dollar fell 95 to 91 cents as markets digested the impact of a deal.
Hopson declined to comment on the Evergrand unit’s acquisition report. “Regarding the suspension of the company’s share trading this morning, the company did not comment on market rumors.”
Evergrand did not immediately respond to a request for comment.
Shares of Evergrand have lost more than 50 percent of their value this year and its bonds are trading at extremely low levels, with the 2022 bond recently trading at 2 cents to the dollar. The September 2 bond was supposed to offer US মিল 5.5 million in coupons, but investors said no funds had been transferred. Evergrand has not made an official announcement about the matter.
The company’s woes have intensified since July last year. In late August, it warned of the risk of default, citing the negative impact of the “negative report” on its liquidity.
Evergrand’s total liability of more than ০০ 30,000 billion has raised fears of a spillover effect on its failure, especially in the wider property sector to reduce leverage.
Evergrand spent months trying to offload assets to raise cash. The company reduced its interest-bearing debt from Rmb572bn (US $ 89bn) to Rmb717bn between December and June, although its overall liabilities, including those of contractors and other businesses, continued during this period.
Last week, Evergrand sold a stake in Shenzhen Bank, a regional lender in northern China, for 1.5 billion, but the bank insisted the money should be used to pay the developer’s ow.