He said he plans to raise about $1.5 billion by selling a minority stake in a Chinese bank to a state-owned enterprise. This suggests that Chinese authorities are trying to stem losses from the real estate giant’s financial difficulties.
For a company based in Shenyang, Liaoning Province, owned by a local branch of China’s state-owned Property Supervision and Administration Committee and a company incorporating local and state governments.
Evergrande says it owns 34.5% of the Hong Kong-listed commercial bank, a regional lender it invested in a few years ago, and will reduce its stake to 14.6% after a transaction that requires regulatory approval. The sales amounted to about 9.95 billion yuan, which is roughly equivalent to $1.55 billion.
Evergrande, the world’s most indebted real estate developer, has cashed in in recent months after borrowing huge amounts of money from investors, banks, suppliers and homebuyers big and small, who had prepaid for apartments promised by the company . I had a hard time getting through and meeting my financial obligations. As of the end of June, it reported debt of $304 billion, which includes $88.5 billion in interest-bearing debt.
Last week, the company missed a coupon payment for the US dollar bond and another interest payment is scheduled for Wednesday.
Many of Evergrande’s developments have been closed and the company pays unfinished apartments to some suppliers and contractors.
Evergrande said in a regulatory filing on Wednesday that “liquidity issues had a significant negative impact on Shengjing Bank,” and that the purchase of most shares by state-owned enterprises would help stabilize the lender’s operations. Would have said
Shengjing Bank’s net profit after tax fell 77% last year to about $191 million, according to creditor regulatory filings. Net income after tax fell 63% to $162 million in the first half of the year. This is because margins of banks have shrunk and expectations of bad loan losses have increased during the COVID-19 pandemic.
As per the interim report, the bank has 18 branches in 5 states and dozens of branches in cities like Beijing, Shanghai and Tianjin.
The buyer, Shenyang Shengkou Financial Investment Group, is involved in industrial investment, capital management and asset management, Evergrande said.
Evergrande has attempted to sell other assets such as an electric vehicle business, shares of a real estate management services company, and office buildings in Hong Kong.
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