China Evergrande to Sell $ 1.5 Billion Stake in Shengjing Bank to State-owned Company

Cranes at a construction site near the China Evergrande Group headquarters in Shenzhen, Guangdong province, China, on September 26, 2021. REUTERS / Aly Song

  • Shengjing demands payment of debts owed
  • Evergrande Says Sale Will Help Stabilize Shengjing
  • Evergrande faces bond payment deadline on Wednesday

HONG KONG, September 29 (Reuters) – China Evergrande, with liquidity problems (3333.HK) said Wednesday that it plans to sell a 9.99 billion yuan ($ 1.5 billion) stake it owns in Shengjing Bank Co Ltd (2066.HK) to a state-owned asset management company as it rushes to raise funds.

Shengjing Bank had required that all net proceeds from the disposal be applied to settle the group’s relevant financial liabilities owed to Shengjing Bank, Evergrande said.

That requirement suggests that Evergrande, which failed to pay interest on the bonds last week, will not be able to use the funds for other purposes, such as another interest payment to foreign bondholders of $ 47.5 million. dollars due on Wednesday.

Investors are closely watching the payment term as the developer’s next big test in the public markets. read more

Evergrande has quickly become China’s biggest business headache as it teeters between a disorderly collapse with far-reaching impacts, a controlled collapse, or the less likely prospect of a bailout from Beijing. read more

The 1.75 billion shares, representing 19.93% of the bank’s issued share capital, will be sold for 5.70 yuan each to Shenyang Shengjing Finance Investment Group Co Ltd, a state-owned company engaged in capital and asset management, China Evergrande said in a presentation to the Hong Kong stock exchange.

Shenyang Shengjing’s stake in the bank will increase to 20.79% after the deal to become the bank’s largest shareholder.

“The company’s liquidity problem has adversely affected Shengjing Bank in a material way,” Evergrande Chairman Hui Ka Yan said in the statement.

“The introduction of the buyer, which is a state-owned company, will help stabilize Shengjing Bank’s operations and, at the same time, help increase and maintain the value of the 14.75% stake in Shengjing Bank held by the company. “.

Beijing is pressuring government companies and state-backed real estate developers to buy up some of the conflicting assets of the China Evergrande Group, people with knowledge of the matter told Reuters this week. read more

Its stake in the bank would be reduced from 34.5% to 14.75%.

Reporting by Donny Kwok and Anne Marie Roantree; Edited by Stephen Coates

Our Standards: The Thomson Reuters Trust Principles.

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