China Evergrande faces possible snag in land deal as Shenzhen partner calls for care, more discussion on reorganisation plan

The reorganisation involves a state-owned company and the structure of the deal is quite complicated, Shenzhen SEZ says in Sunday filing

The deal needs further discussion, it adds, even after four years have passed since it was first mooted

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Hui Ka-yan (middle), China’s third richest billionaire, is the chairman of China Evergrande Group. Photo: David Wong

Published: 8:30am, 28 Sep 2020Updated: 8:30am, 28 Sep 2020

China Evergrande, the nation’s most indebted developer, faces another potential snag in an attempt to reorganise its sprawling property assets after its partner in Shenzhen called for care and patience in assessing the deal.

Shenzhen Special Economic Zone Real Estate & Properties (Shenzhen SEZ), which is supposed to buy Evergrande’s unit Hengda Real Estate, suggested that it would not rush into an agreement despite four years having passed since the plan was first mooted.

“The business reorganisation involves a state-owned company and the structure of the deal is quite complicated,” the firm said, in an exchange filing on Sunday. “It is an important deal which has no precedent. The plan needs further discussion.”

The proposal unveiled in October 2016 has been pushed further out six times – by three, six or 12 months – showing the difficulty in agreeing on the terms. The most recent extension was in December 2019, by a full year to the end of 2020.

China Evergrande’s leverage exceeded its peers at the time when it proposed the deal with Shenzhen SEZ

The four-year lapse has exposed the deal to much speculation. One such episode unfolded last week, when a fake document showed Evergrande had sent out a letter pleading to authorities for speedy approval. The developer has reported it to the local police for defamation.

“China Evergrande has denied the circulated document on Thursday,” Shenzhen SEZ said in the Sunday filing. “The company and every side on the deal has strengthened communication and strived to push forward the reorganisation.”