China Evergrande to Raise $5 Billion from Property Unit Sale
Distressed developer China Evergrande will sell a half-stake in its property management unit to Hopson Development for more than $5 billion, Once China's top-selling developer, Evergrande is facing what could be one of the country's largest-ever restructurings as a crackdown on debt leaves it unable to refinance $305 billion in liabilities. Evergrand said it requested a trading halt pending an announcement about a major transaction and Evergrande Property Services Group said the announcement constitutes "a possible general offer for shares of the company." Hopson Development was the buyer of a 51% stake in the property unit for more than HK$40 billion ($5.1 billion), citing unspecified other media reports. Hopson said it had suspended trading in its shares, pending an announcement related to a major acquisition of a Hong Kong-listed firm and a possible mandatory offer. The possible deal seemed to rekindle broader concerns about the risk of contagion or of a hit to China's property sector and the broader economy if Evergrande collapses or is liquidated at rock-bottom prices. Beijing has prodded government-owned firms and state-backed property developers to purchase some of Evergrande's asset. With liabilities equal to 2% of China's gross domestic product, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world. Initial worries have eased somewhat after China's central bank vowed to protect homebuyers' interests, but ramifications for China's economy kept investors on edge.
Tags : INTERNATIONAL homebuyers Property Investors China Evergrande Hopson Development