Chinese real estate developer Evergrand says a potential sale of its property service unit has collapsed, putting increasing pressure on the group to avoid a formal default.
A deal to sell HK ন 20bn (2.6bn) to Hopson Development Holdings, a 50.1 percent co-developer of Evergrand Property Services Group, was canceled last week, the group said in a filing late Wednesday night.
Evergrande, the world’s most indebted property developer, has more than ০০ 30,000 billion in liabilities, embroiled in a liquidity crisis that has caused global concern over the deteriorating health of China’s vast real estate sector.
The group’s shares and its property services unit, which is also listed in Hong Kong, have been shut down for most of October since the division’s possible sale in Evergrande was announced. It applied to resume trading of its shares on Thursday, adding to the filing.
The growing crisis has caused Evergrand to miss out on paying consistent interest to international bondholders. September 2 Initial Missing Payments introduced an additional 300-day deadline, ending this weekend before the official default was announced. Evergrand has rushed to sell assets but many hope it will require the biggest restructuring in Chinese corporate history.
In one of the two filings on Wednesday, Evergrande said that apart from selling a portion of a regional bank in China, the other, “there has been no material progress in the sale of the group’s assets.”
The developer also broke the silence on missed interest payments, saying the grace period was “not over yet”. Its silence, along with the suspension of its share transactions, has criticized the protection afforded to shareholders on Hong Kong’s stock exchanges.
Earlier in the month, advisers to bondholders said in a call that they had not received any “meaningful engagement” since reaching out to the company in mid-September, and expressed concern about the sale of shares of the service unit and the bank.
Evergrand peers, including defunct developer Fantasia and Scenic Holdings, defaulted on bonds worth $ 206 million and $ 246 million, respectively, while the yields of risky Chinese orrow buyers in Asian bond markets reached their highest level in a decade.
The People’s Bank of China fell into Evergrand’s crisis for the first time late last week, saying the effects of the spillover were “controllable” and blamed the company for its problems.
This week’s economic data showed that China’s real estate industry contracted in the third quarter of the year, while new home sales in 70 cities in September fell for the first time since 2016 compared to the previous month.