Evergrande is selling its $1.5 billion stake in a bank to help pay off debts.


Evergrande, the embattled Chinese real estate developer said Wednesday it has sold its stake in Shengjing Bank for about $1.5 billion, and the proceeds go to pay off its debts.

A Chinese state-owned enterprise is buying a stake worth about 20 percent of the commercial bank.

The move comes as Evergrande, which has outstanding bills totaling over $300 billion. missed an interest payment On a US dollar bond last week. He has another $45 million payment on an international bond due Wednesday.

Evergrande has yet to publicly disclose either payment, and a missed payment has a 30-day grace period before it becomes default. Investors, The Chinese government can step in to save the company.

inside that filing Announcing the Shengjing Bank share sale signed on Tuesday, Evergrande said its own liquidity problems had “negatively affected” the bank. Transferring ownership of the stake will help stabilize the bank, which will support the value of the approximately 15 percent stake Evergrande will hold.

As a condition of the sale, Shengjing Bank said Evergrande would use all proceeds to meet its “related financial obligations” with the bank. This flow of funds and the involvement of state-owned entities in the deal may indicate China’s willingness to limit the loss from Evergrande’s cash shortage.

“We believe the Chinese government is involved in a capacity to help resolve the situation,” Fitch Ratings director Adrian Cheng told reporters Wednesday. Said. credit rating agency Evergrande downgraded and some of its subsidiaries passed a “C” on Tuesday, meaning that “a default or a similar process to default has begun.”

“We believe they prioritize home buyers and ensure that products are delivered,” Mr. Cheng said. Next will be suppliers who pay back, followed by domestic bondholders and foreign bondholders.

Alexandra Stevenson contributing reporting



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