Shares of soon-to-be collapsing Evergrande were sent spiralling into the abyss on Thursday, after the company failed to materialize a $2.6 billion asset sale to a smaller rival developer.
Evergrande— which was once one of China’s largest property developers— is now facing over $300 billion in debt, after negotiations to sell a 50.1% stake in its property services unit to rival company Hopson Development Holdings fell through. On Wednesday, Hopson revealed that discussions between the two companies failed to reach a consensus, with Evergrande later confirming the deal’s termination in a subsequent filing.
As a result, shares of Evergrande were sent tumbling by nearly 15%, while its Evergrande Property Services segment slumped by more than 5%. Hopson Development Holdings, meanwhile, saw its stock increase 12%.
The latest failed deal marks yet another unsuccessful attempt by Evergrande to desperately shore up much-needed liquidity. Earlier this week, Reuters revealed that the real estate developer’s pending sale of its Hong Kong headquarters also fell through, after the buyer backed out due to Evergrande’s troubled financial situation.
In the interim, the grace period for Evergrande’s failed $83.5 million offshore coupon payment comes to an end on October 23, and if the developer doesn’t pay, it will be filed under as an official default.
Information for this briefing was found via Evergrande and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.