Evergrande to sell stake worth US$1.5 billion in Shengjing Bank

Highlights 

  1. Evergrande is set to dispose of its entire stake in Shengjing Bank.
  2. The stake sale would fetch Evergrande US$1.5 billion.
  3. The company has a US$47.5 million bond interest payment deadline today.

Embattled Chinese property developer China Evergrande Group has decided to sell its entire stake in Shengjing Bank as it is struggling repay to its debt.

The company informed the Hong Kong Stock Exchange that it would be selling the 1.75 billion shares that it holds in Shengjing Bank. These shares are worth HK$12.2 billion (US$1.6 billion) in market value right now. The company holds a 19.93% stake in Shengjing Bank as on date.

The company is selling the shares of the bank at 1.3% discount to the current market value. The consideration for the disposal of the non-publicly traded domestic shares in Shengjing Bank is RMB5.70 per share, totalling RMB9.99 billion, the company said. The consideration was determined by the Vendor and the Purchaser after arm’s length negotiations, it added.

“The Company’s liquidity issue has adversely affected Shengjing Bank in a material way. The introduction of the Purchaser, being a state-owned enterprise, will help stabilise the operations of Shengjing Bank and at the same time, help increase and maintain the value of the 14.75% interest in Shengjing Bank retained by the Company,” the company said in the filing, explaining its decision to sell stake at the bank.

Earlier, Evergrande had disposed of CNY1 billion worth of shares in Shengjing Bank.

The cash-starved realtor has already missed one key US$83.5 million coupon payment last week, on an offshore March 2022, US$2 billion 5-year bond. Dollar bonds are typically held by foreign investors.

The property giant, which is saddled with more than US$300 billion in debt, has been struggling to raise funds as it faces a US$47.5 million bond interest payment deadline on Wednesday. The embattled real estate giant also owes payments to banks and suppliers.

Shares of Evergrande were trading 12.36% higher at the time of filing this copy.

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