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Evergrande ends its effort to sell a $2.6 billion stake in its property management unit.

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Ahmed Bendary
Ahmed Bendary is reporter at DDDNews a focus on health news.

China Evergrande, the struggling real estate giant, said on Wednesday it had ended its effort to sell a stake in its property services company to another developer, its latest setback following weeks of missed interest payments.

The now-scrapped sale of a 50 percent stake in Evergrande Property Services would have raised about $2.6 billion. The termination comes as Evergrande is scrounging for assets to sell to help pay angry home buyers, contractors, employees and creditors. Evergrande is just days away from defaulting on an $83 million interest payment that it skipped in September.

The developer warned in a securities filing in Hong Kong that there was “no guarantee” it would be able to meet its financial obligations or negotiate an extension with its creditors. Evergrande “will update the market as appropriate on material progress made in easing its liquidity issue,” it said.

Evergrande, once China’s most prolific developer, has more than $300 billion in unpaid bills and is facing a crisis that has sent a wave of panic through global markets. In the past, many corporate flameouts were saved by Chinese authorities who feared the companies were too big to fail, but Beijing has largely remained silent over any plans to help the flailing developer.

Growing market concerns about Evergrande prompted Chinese regulators last week to address its issues directly for the first time. Zou Lan, a central bank official, said on Friday that the risks that Evergrande posed were largely “controllable” and isolated to the real estate industry.

Officials for China’s National Bureau of Statistics on Monday played down the impact of a roiling real estate market on China’s broader economy, which slowed in the third quarter from the previous quarter.

Behind the scenes, however, authorities appear to be pushing buyers toward Evergrande’s assets so that the developer can fend off circling creditors, experts said.

“Given the size of the debt, any assumption that the central government would be hands off would reflect a lack of understanding of how things work in China,” said Zhiwu Chen, a professor of finance at the University of Hong Kong.

But Evergrande said Wednesday that aside from a deal it announced in late September to sell a stake it held in Shengjing Bank for about $1.5 billion, it had made “no material progress” on selling assets. In the interim, Evergrande said it would “continue to implement the measures” to ease its “liquidity issues.”

Evergrande said it had ended the $2.6 billion real estate deal because it had “reason to believe” that the buyer, a unit of the Chinese developer Hopson Development, “had not met the prerequisite to make a general offer for shares in Evergrande Property Services.” Hopson said in its own securities filing that it did “not accept that there is any substance whatsoever” to Evergrande’s “purported rescission or termination” of the deal.

Last month, Evergrande blamed “ongoing negative media reports” on its inability to sell off pieces of its vast empire and said it faced “tremendous” financial pressure. It has hired restructuring experts to “explore all feasible options” for its future.

Ahmed Bendary
Ahmed Bendary is reporter at DDDNews a focus on health news.

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