Evergrande's $2.6 Billion Unit Sale Fails as Chinese Officials Seek to Calm Nerves

China Evergrande Group has dropped plans to sell a 50.1% stake in its property services unit, which would have raised $2.6 billion, dealing another blow to the cash-strapped developer's efforts to raise cash to pay its creditors, Reuters reported. Once China's top-selling developer and now reeling under more than $300 billion in liabilities, Evergrande was in talks to sell the stake in Evergrande Property Services to smaller rival Hopson Development Holdings. In a stock exchange filing late on Wednesday, Evergrande said that the company had reason to believe that Hopson had not met the "prerequisite to make a general offer" for shares of its property services unit. It did not elaborate. In a separate exchange filing, Evergrande said that barring its sale of a stake worth $1.5 billion in Chinese lender Shengjing Bank Co Ltd, there had been no material progress on sale of assets of the developer. Evergrande's disclosures came as more Chinese officials sought to reassure investors and homeowners on Wednesday over a debt crisis afflicting the country's property sector, which has roiled global markets in recent weeks. Worries that a cash crunch at Evergrande, whose liabilities equal to 2% of China's gross domestic product, could cause economic contagion have resulted in its debt-laden peers being hit with rating downgrades on looming defaults. Chinese property developers have total outstanding debt of 33.5 trillion yuan ($5.24 trillion), according to Nomura, equivalent to roughly a third of the country's gross domestic product. Read more.
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