Evergrande halts stock trading on possible sale of property management unit as more debt deadlines approach

Shares of China Evergrande Group and its property management arm were halted from trading in Hong Kong on Monday ahead of a potential asset sale, as the world’s most indebted developer rushes to sell its core assets for cash to stave off a liquidity crunch.

Evergrande Property Services Group said trading was suspended pending an announcement under the city’s takeover code about a “possible general offer” for its shares, according to a regulatory filing.

The offer could come from another China-based developer Hopson Development, which is said to be buying a 51 per cent stake that values the unit at HK$40 billion (US$5.1 billion), Chinese financial news portal Cailian reported, citing people familiar with the matter. Hopson was also suspended from trading in Hong Kong for a potential takeover announcement, it said in a filing.

Evergrande did not immediately respond to a request for comment on Monday. Its shares have plunged 83 per cent to HK$2.95 on Friday from this year’s high of HK$17.26 on January 19, erasing US$24.4 billion of market value.

Evergrande had 1.97 trillion yuan (US$305 billion) in total liabilities on June 30, and concerns have been mounting this year about its ability to service its massive debt load, particularly after it failed to repay contractors and suppliers on time. It also appeared to have asked for more time to pay the interests on some offshore dollar bonds in recent weeks.