The Chinese government has blinked and has organised a partial bailout of stricken property giant, China Evergrande with mainland media reporting a looming $US5 billion asset sale.
The reports, in official media led by the Global Times, came hours after Evergrande shares were halted in Hong Kong with no explanation.
Mainland property group, Hopson Development also asked for its shares to be halted.
And several hours later we had the answer in the mainland media report which said Evergrande will sell a half-stake in its property management unit to Hopson Development for more than $US5 billion.
Evergrande said it requested a trading halt pending an announcement about a major transaction and Evergrande Property Services Group said the announcement constitutes “a possible general offer for shares of the company.”
China’s state-owned Global Times said Hopson Development was the buyer of a 51% stake in the property unit for more than HK$40 billion ($US5.1 billion), citing unspecified other media reports. Hopson said it had suspended trading in its shares, pending an announcement related to a major acquisition of a Hong Kong-listed firm and a possible mandatory offer.
“Looks like the property management unit is the easiest to dispose in the grand scheme of things, indicative of the company trying to generate near term cash,” said OCBC analyst Ezien Hoo.
“I’m not sure this necessarily means that the company has given up on surviving, especially as selling an asset means they are still trying to raise cash to pay the bill,” Reuters reported.
Shares of Hopson, which has a market value of $HK60.4 billion ($US7.8 billion), have jumped 40% so far this year and it was rated B+ by Fitch in June.
Evergrande’s property development unit was also profitable in the first half of 2021 and revenue rose compared with a year earlier.
Evergrande faces deadlines on dollar bond coupon payments totalling $US162.38 million in the next month. It sold shares in a China bank last week for $US1.5 billion.
