(Deutsche Welle) The Chinese real estate giant Evergrande originally planned to sell a majority stake in its property management company for approximately US$2.6 billion, but it broke because of “there is no consensus among shareholders”. For Evergrande, which is in a debt crisis, it is undoubtedly a problem. It is worse, the transaction could have obtained an emergency fund for Evergrande in order to alleviate the financial emergency.
China Evergrande said on the evening of Wednesday (20th) that it had previously planned to sell 50.1% of its profitable subsidiary Evergrande Property to a subsidiary of its competitor Hesheng Chuangzhan Group Co., Ltd. The agreement was originally scheduled for October 12. It was completed on the same day, but Evergrande did not complete the sale of the corresponding equity to the company.
China Evergrande explained that it was informed by parties other than the Securities and Futures Commission that the transferee Hesheng Chuangzhan did not meet the prerequisites for making a comprehensive tender offer for Evergrande Property, so the company exercised its right to terminate or terminate the protocol.
Evergrande Properties is listed in Hong Kong. According to Hong Kong’s securities regulatory requirements, when buyers want to acquire 30% or more of a company’s shares, they must make a tender offer to all shareholders.
Hopson Chuangzhan stated in another announcement on Wednesday (20th) that the company has entered into an agreement with the major shareholder of Evergrande Property and agreed to purchase the equity of Evergrande Property, but the seller did not complete the sale to the buyer in accordance with the terms of the agreement. Sale of shares.
Sources revealed to Reuters that Evergrande was forced to shelve the sale of equity in the property service department to Hopson Development because the sale was not approved by the Guangdong Provincial Government. Neither Evergrande nor the Guangdong Provincial Government responded to this.
The report said that some of Evergrande’s international creditors also opposed the transaction. One of the creditors said they also opposed the transaction. If the company sells its assets before it goes bankrupt, the creditors will not have that much money to recover.
Since October 4, trading in the stocks of China Evergrande and its subsidiaries and Hopson Chuangzhan have been suspended.
President of China: Risks are under control
The breaking of this transaction means that Evergrande’s debt crisis may continue, but Chinese officials are confident in Evergrande. The People’s Bank of China website published on Wednesday (20th) Governor Yi Gang’s talk at the 2021 G30 International Banking Conference. In response to the Evergrande incident, he said that Evergrande’s risk is a case in point, and he is confident that he can control the risk within a certain range and avoid it. Systemic risks occur.
Chinese Vice Premier Liu He said at the 2021 Financial Street Forum annual meeting on Wednesday (20th) that there are individual problems in the real estate market, but the overall risk is controllable, reasonable funding needs are being met, and the overall trend of the healthy development of the real estate market is not. Will change.
After two consecutive missed payment deadlines at the end of last month, China Evergrande failed to fulfill a debt interest of US$148 million on October 11 again. However, compared with overseas debt, domestic debt is much more optimistic. According to sources, Evergrande Real Estate, a subsidiary of Evergrande Group, has remitted the interest on the domestic corporate bond “20 Evergrande 05” issued on the 19th, amounting to RMB 120 million. Yuan.
China Evergrande still has more than 300 billion U.S. dollars in debt, including nearly 20 billion U.S. dollars in outstanding U.S. dollar bonds. Due to the size of the Evergrande Group, some experts worry that the Evergrande crisis will pose risks to the Chinese economy and other regions.
Evergrande stated in a document submitted on Wednesday (20th) that it will continue to implement measures to “mitigate liquidity problems”, and will do its best to negotiate, negotiate with creditors to renew or extend loans, and do everything possible with creditors. Negotiate to extend its loan.
Reuters reported that, so far, creditors have stated that, despite Evergrande’s many efforts, they have not been contacted.
(Reuters, German News Agency, Wall Street Journal, etc.)
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