Evergrande raises $ 1.5 billion by selling bank stake to crown corporation


China Evergrande Group EGRNF 5.00%

said he plans to raise around $ 1.5 billion by selling a minority stake in a Chinese bank to a state-owned company, an indication that the country’s authorities are working to contain the fallout from the financial woes of the lender. ‘immovable.

Evergrande unit hits deal to sell nearly 20% of Shengjing Bank Co.

2066 -0.71%

, based in Shenyang, Liaoning Province, to a company whose owners include the local branch of the Commission for Supervision and Administration of State-Owned Assets of China as well as local and provincial governments.

Evergrande owns 34.5% of the Hong Kong-listed commercial bank, a regional lender in which it invested several years ago, and said its stake would drop to 14.6% after the deal, which requires regulatory approval. He said the sale was valued at around 9.99 billion yuan, the equivalent of about 1.55 billion dollars.

Evergrande, the world’s most indebted real estate developer, has struggled in recent months to raise funds and meet financial obligations after borrowing heavily from large and small investors, banks, suppliers and home buyers who have paid in advance the apartments that the company has promised to build. It declared the equivalent of $ 304 billion in liabilities at the end of June, including $ 88.5 billion in interest-bearing debt.

Last week, the company missed a coupon payment on its US dollar bonds and it has another interest payment due on Wednesday.

Construction on many Evergrande developments has been halted and the company has paid off some of its suppliers and contractors with unfinished apartments.

Evergrande said in a regulatory filing on Wednesday that “its liquidity problem has adversely affected Shengjing Bank significantly,” and the purchase of most of its stake by a state-owned company would help stabilize the lender’s operations.

Shengjing Bank’s after-tax net profit fell 77% last year to the equivalent of about $ 191 million, according to the lender’s regulatory documents. Its first-half net profit after tax fell 63% to $ 162 million, as the bank’s interest margins narrowed and it raised its expectations for loan losses during the Covid pandemic. 19.

The bank has 18 branches in five provinces, as well as dozens of branches in cities like Beijing, Shanghai and Tianjin, according to its interim report.

The buyer, Shenyang Shengjing Finance Investment Group Co., is involved in industrial investment, capital management and asset management, Evergrande said.

Evergrande attempted to sell other assets, including stakes in an electric vehicle company and a property management services company, as well as an office building in Hong Kong.

Write to Serena Ng at [email protected] and PR Venkat at [email protected]

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Appeared in the print edition of September 29, 2021 under the title “Beijing is preparing to limit the fallout from Evergrande”.

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