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China Evergrande suspended its shares from trading in Hong Kong on Monday, while the world’s most guilty real estate developer was ready for the possible sale of its property management unit.
Evergrande Property Services Group also stopped trading its shares and said in a stock exchange that the step had been taken before a ‘possible general offer’ for its shares, without announcing a buyer.
Evergrande rushes to sell assets to improve its financial position after failing to pay off foreign bonds last month, meeting expectations of a major restructuring process.
The group’s property management unit, which was listed in Hong Kong in December and had a market capitalization of HK $ 55 billion (US $ 7.1 billion), is one of Evergrande’s most important assets in addition to its hundreds of development projects in China.
Shares in Hopson Development, a developer listed in Hong Kong, were also suspended on Monday “pending the announcement of announcement (s) regarding a major transaction of the company”. Chinese media reports on the mainland suggest it would buy a majority stake in the Evergrande property management subsidiary.
Hopson’s mortgage maturing in 2023 fell from 95 to 91 cents on the dollar as markets devoured the implications of a deal.
Hopson declined to comment on reports of a takeover of the Evergrande unit. “Regarding the suspension of the company’s stock exchange announced this morning, the company is not commenting on rumors in the market.”
Evergrande did not immediately respond to a request for comment.
Evergrande’s shares have lost more than 80 percent of their value this year and its bonds are trading at a very tight level, with a 2022 effect at 26 cents on the dollar. A $ 83.5 million coupon owed on the bond on September 23, but investors said no funds were transferred. Evergrande did not make an official announcement on the matter.
The company’s woes have worsened since July last year. At the end of August, it warned on the risk of default, with reference to the detrimental effect of ‘negative reports’ on its liquidity.
Evergrande’s total liabilities of more than $ 300 billion have raised fears of a flood in case of failure, especially pressure from Beijing on the broader real estate sector to reduce leverage.
Evergrande tried for months assets download to collect cash. The company reduced its interest-bearing debt to R57bn (R89bn) from R717bn between December and June, although its overall liabilities, which include liabilities to contractors and other businesses, increased during the period.
Last week, Evergrande sell part of an interest in Shengjing Bank, a regional borrower in northern China, for $ 1.5 billion, but the bank insists the money be used to repay the obligations owed to the developer.