Evergrande to resume trading after talks end on potential deal
Beijing (AFP) – Chinese property giant Evergrande was set to resume trading in Hong Kong on Thursday morning, hours after it said a potential deal had fallen through and warned it might fail to meet its financial obligations.
The troubled company suspended trading on October 4 pending an announcement on a "major transaction" as it struggles with some $300 billion of debt -- with anxious investors' fearing the fallout from its predicament could impact the wider Chinese economy.
But on Wednesday, Evergrande said it had applied for a trading resumption.
A deal -- worth HK$20.04 billion ($2.58 billion) -- to sell a 50.1 percent stake in its property services arm had fallen through, it added in a separate statement.
The purchaser was originally to have been a unit under Hong Kong real estate firm Hopson Development Holdings.
Evergrande said it would continue to implement measures to ease its liquidity issues, cautioning that "there is no guarantee that the group will be able to meet its financial obligations".
The Shenzhen-based company has missed several payments on dollar-denominated bonds.
A 30-day grace period on an offshore note is up on Saturday.
Several domestic property rivals have in recent weeks already defaulted on debts and have seen their ratings downgraded.
Fears that the firm could collapse and send shockwaves through the Chinese economy rattled markets earlier this month, though Beijing has said any fallout would be containable.
China's property sector has been under tightened scrutiny since regulators announced caps for three different debt ratios in a scheme dubbed "three red lines" last year.
Evergrande's announcements came as China's new-home prices fell for the first time in six years last month, with the property sector struggling after a government clampdown.
© 2021 AFP