Real estate investment company Chinese Estates, the main shareholder of the Evergrande group, has announced plans to sell its stake in the company due to its current weak financial position.
In a statement to the Hong Kong Stock Exchange, Chinese Estates clarified that the board is “concerned” about the latest liquidity information provided by Evergrande and “the potential impact” if the announced remedial action “fails to be applied effectively.”
Chinese Estates is one of the leading corporate investors in Evergrande. At the end of last month, its participation was 5.66%. Since then, it has sold approximately 109 million shares, representing about 0.82% of its stake in Evergrande, for a total of HK $ 246.5 million (€ 27.1 million). After consultation with shareholders, the company has a maximum of 12 months to sell the remainder of its stake.
Evergrande shares have depreciated about 80% since the beginning of the year. In Hong Kong Thursday, bonds soared 32%, the largest daily gain since going public in November 2009, as investors focused on paying off one debt rather than a shareholder position.
If it manages to sell its entire stake in Evergrande, Chinese Estates estimates a loss of HK $ 9,486 million (€ 1,041 million) this year. Evergrande, considered the largest real estate company in the world, is facing serious liquidity problems and is at risk of insolvency.
This Thursday is a pivotal day for the group, as an additional $ 47.5 million will be added on the 29th to maturity of about $ 84 million, which is in line with the interest rate on some of the dollar-denominated bonds.
