Evergrande faced major test Wednesday after missing bond interest payments last week, with another $47.5 million deadline for coupon payments.
HONG KONG – Cash-strapped China Evergrande Group said on Wednesday it plans to sell a 9.99 billion yuan ($1.5 billion) stake in Shengjing Bank Co Ltd, a state-owned asset management company as it funds Scrambles to collect.
After missing a bond interest payment last week, Evergrande faced a major test Wednesday, with the deadline for another $47.5 million coupon payment that investors are watching closely.
Evergrande has quickly become China’s biggest corporate headache as it grapples with far-reaching implications for a looming recession, a managed collapse or a bailout by Beijing less likely.
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China Evergrande said 1.75 billion shares, representing 19.93% of the bank’s issued share capital, would be sold for 5.70 yuan to Shenyang Shengjing Finance Investment Group Co., Ltd., a state-owned enterprise involved in capital and asset management. Is. Filing on the Hong Kong stock exchange.
After the deal to become the largest shareholder of the bank, Shenyang Shengjing’s stake in the bank will increase to 20.79%.
“The company’s liquidity issue has materially adversely affected Shengjing Bank,” Evergrande President Hui Ka Yan said in the statement.
“The introduction of the buyer, being a state-owned enterprise, will help to stabilize the operations of Shengjing Bank and, at the same time, help to increase and maintain the value of 14.75% interest in Shengjing Bank maintained by the company. “
Beijing is pushing government-owned firms and state-backed property developers to buy some assets of China’s Evergrande Group, people with knowledge of the matter told Reuters this week.
Shengjing Bank demanded that all net proceeds from the settlement be applied to settle the group’s related financial liabilities due to Shengjing Bank, Evergrande said.
Its stake in the bank will be reduced from 34.5% to 14.75%.