Second-biggest shareholder plans Evergrande exit

Selling out: A police officer and security guards stand on duty outside the Evergrande headquarters in Shenzhen. With US$305bil (RM1.3 trillion) in liabilities, the group is struggling to meet its debt obligations. — AP

HONG KONG: Chinese Estates Holdings, the second-biggest shareholder of embattled developer China Evergrande, said it has sold US$32mil (RM134mil) worth of its Evergrande stake and plans to exit the holding completely.

“The directors are cautious and concerned about the recent development of China Evergrande Group including certain disclosure made by China Evergrande Group on its liquidity,” Chinese Estates said in a filing with the Hong Kong stock exchange.

With US$305bil (RM1.3 trillion) in liabilities, Evergrande is struggling to meet its debt obligations and investors worry that the rot could spread to creditors including banks in China and abroad.

Chinese Estates, which owned about 6.5% of Evergrande’s equity capital as of Sept 10 according to Refinitiv Eikon data, said it has mandated a sale of all or part of the remaining 5.66% Evergrande stake either on the market or through block trades.

The disposal mandate will be valid for 12 months from the date of a shareholders’ meeting on Sept 23 to approve the sale, it said.

Chinese Estates said it had already sold 108.91 million shares, or 0.82%, of Evergrande’s issued share capital between Aug 30 and Sept 21 for HK$246.5mil (RM133mil).

The company estimated that if the entire stake is sold, it will realise a loss of about HK$9.48bil (RM5bil) for the year ending in December 2021.

Proceeds from the disposals would be used for general working capital and for reinvestment when opportunities arise, it added.

Meanwhile, cash-strapped Evergrande said it held an internal meeting late on Wednesday night, in which its chairman urged company executives to ensure the quality delivery of properties and redemption of wealth management products.

There is mounting political pressure on the company to act as homebuyers and retail investors grow increasingly angry of having sunk their savings in the properties and wealth management products of highly indebted Evergrande.

Global markets were closely watching whether Evergrande will be able to pay interest on one of its dollar bonds due today, after some relief the previous day when the People’s Bank of China injected 90 billion yuan (RM58bil) into the banking system and an Evergrande unit said it had “resolved” a coupon payment on an onshore bond.

Evergrande chairman stressed to employees on the importance to resume constructions and to have a “highly responsible attitude” towards helping wealth investors redeem their products, adding it was the company’s top priority.

The chairman has repeated those messages in several occasions this month, as it has an estimated 40 billion yuan (RM26bil) of wealth management products outstanding and hundreds of thousands of uncompleted homes to deliver to homebuyers.

The company said on Saturday it has begun repaying investors in its wealth management products with real estate, and investors interested in redeeming the products for physical assets should contact their investment consultants or visit local offices. — Reuters

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