China Evergrande ends four-year pursuit of Shenzhen rival, to repay some of US$19.7 billion raised from investors
- China Evergrande terminates back-door listing plan for Hengda unit after several delays and controversies
- Developer will repay some investors and retain most backers, averting a US$19.7 billion cash crunch in first quarter of next year
The developer, helmed by the country’s third-richest tycoon, Hui Ka-yan, has resolved to terminate the reorganisation plan with Shenzhen Special Economic Zone Real Estate & Properties Group (Shenzhen Real Estate), it said in a Hong Kong stock exchange filing on Sunday. It did not provide any reason for the decision.
The reorganisation, first mooted in October 2016, involved selling its unit Hengda Real Estate to Shenzhen Real Estate in exchange for equity control.
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Hui has called on some 130 billion yuan (US$19.7 billion) of capital in the past four years from more than 30 business partners and companies to invest in Hengda by promising big dividends. The money was to be repaid by the end of March next year, should the reorganisation fail to proceed.
Some of his investors have agreed to maintain their investment in Hengda and not to demand for repayment of as much as 86.3 billion yuan, according to the Sunday’s filing, while negotiations with investors holding 35.7 billion yuan worth of interests have been completed, it said.
Talks with others holding 5 billion yuan were in progress, and the company had agreed to buy back 3 billion yuan of equity in Hengda from undisclosed investors.
China Evergrande rues speculative attack amid cash woes ahead of January 31 deadline
Evergrande had 835.5 billion yuan in borrowings on June 30, up from about 800 billion yuan at the end of 2019, according to its interim report published in late September. Almost half of them will come due through June next year.
The group has an expansive reach in the onshore property market, owning more than 870 projects in at least 280 cities across all provinces and regions, according to its website. The economic slowdown, however, forced it put 223 properties in 111 cities up for sale with big discounts to shore up its cash flow.