Despite narrowly making a series of overdue coupon payments on the eleventh hour, Evergrande’s financial crisis is far from over— if anything, it is just one step closer to an inevitable default.
One of Evergrande’s largest shareholders and long-time supporters has decided to eliminate its stake in the embattled real estate developer, with plans to liquidate all of its share holdings in the near future. According to a company filing, Hong Kong-based Chinese Estates Holdings has sold approximately 270 million shares of Evergrande so far, after already slashing its holdings of the company by one-third back in September. As of current, the shareholder’s stake has fallen from 6.48% to a mere 2.36%.
Back in September, Chinese Estates revealed plans to liquidate its entire stake in Evergrande, suffering a loss of over $1.33 billion for 2021, which was later revised upwards to $1.36 billion. Although the real estate developer has thus far been able to avoid a complete collapse, last week S&P Global Ratings warned that a default is still “highly likely.”
In the meantime, Kaisa, another Chinese real estate developer, appears to have had better luck than its counterpart Evergrande. On Thursday, the real estate company laid out plans to pay back investors about $171.9 million worth of wealth management products, after missing a payment earlier in November. In addition, Kaisa also plans to restructure its offshore debt payments due in December by offering a total of $380 million in new bonds to investors, which would be due in 2023.
Information for this briefing was found via the companies mentioned. 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.