A unit of Evergrande intends to sell almost 20% of Shengjing Bank Co Ltd, which is headquartered in the Liaoning provincial city of Shenyang, to a business whose shareholders include the local office of China’s State-Owned Assets Supervision and Administration Commission, according to a statement released Wednesday, the Wall Street Journal reports. In particular, the firm, which is struggling to avoid defaulting on its debts, intends to sell 9.99 billion yuan ($1.5 billion) in shares to the state-owned asset management firm to prevent defaulting on its obligations.
Announcement came via Hong Kong Exchange
In the face of a new bond interest payment deadline on Wednesday, the property behemoth, burdened by a massive $300 billion debt, has been trying to raise funds. On Wednesday, Evergrande disclosed in a filing with the Hong Kong exchange that it will sell the 1.75 billion shares or 19.93% stake in Shengjing Bank that it now holds to the Shenyang Shengjing Finance Investment Group for 5.70 yuan a share. Upon completion of the deal, Shenyang Shengjing’s ownership interest in Shengjing Bank will rise to 20.79%, making it the lender’s biggest stakeholder. Interestingly, market participants are keeping a close eye on the company to see whether it can make its $47.5 million interest payment due on Wednesday. The property company had previously missed one important coupon payment of $83.5 million last week, which was due on an offshore bond with a face value of $2 billion due in March 2022.
Prospective asset buyers emerge
While China Evergrande faces another payment deadline today for a $47.5 million offshore coupon, a small number of potential buyers for the company’s assets have surfaced in the Chinese mainland. On the surface Beijing appears to be pressuring state-owned enterprises and state-backed property developers to acquire some of Evergrande’s other properties, with attention being given to both political and economic reasons, according to a Reuters report citing unidentified sources. By way of explanation, government-backed developers Vanke, China Jinmao Holdings, and China Resources Land are among the companies approached to buy Evergrande’s assets. Meanwhile, in Guangzhou, a small number of state-owned companies have already completed due diligence on properties. For example, Guangzhou City Construction Investment Group is close to purchasing Evergrande’s Guangzhou FC Soccer stadium and adjacent residential developments. [coinbase]
