Evergrande scraps US$2.6 billion sale of property services unit to Hopson, suffering a second rebuff to its asset disposal in a week

An October 1 bid to buy 50.1 per cent of Evergrande Property Services for HK$20.04 billion failed to materialise, Hopson Development Holdings said

Evergrande rescinded the sale on October 12 amid a dispute over the payment of the sales proceeds, Hopson said

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A partially illuminated sign of the Evergrande Center sign at the developer’s building in Shanghai on October 9, 2021. Photo: AFP

Published: 11:50pm, 20 Oct 2021Updated: 11:27pm, 21 Oct 2021

China Evergrande Group scrapped the sale of its property management unit to a rival, as its asset disposal plan was rebuffed for the second time in a week just before a 30-day grace period runs out for declaring the world’s most indebted developer in default.

An October 1 bid to buy 50.1 per cent of Evergrande Property Services for HK$20.04 billion (US$2.58 billion) failed to materialise because Evergrande rescinded the sale on October 12, according to a late-night filing by the purchaser Hopson Development Holdings Limited to the Hong Kong stock exchange.

Hopson said it “does not accept that there is any substance whatsoever to [Evergrande’s] purported rescission or termination of the agreement and has refuted [its] notice,” according to the statement, adding that while Hopson “is prepared to complete the purchase of [the Evergrande unit], there is no certainty that the sale as agreed will be completed.”

Evergrande Property Services, whose shares had been halted from trading on the Hong Kong exchange since October 1, said in two separate filings that the transaction “did not take place” after it terminated the deal because Hopson “had not met the prerequisite” for the purchase, without providing details. Evergrande’s spokespeople could not be reached to comment.

A view of Hopson Development Holdings’ mixed-development project in Shanghai on 5 October 2021. Photo: EPA-EFE

The deal may have blown up because of a disagreement over the payment of the purchase price, Hopson said. Evergrande wanted immediate payment, while Hopson wanted to pay only after completing a due diligence to assess the payable accounts and receivables with suppliers, according to the statement. Evergrande did not comment.

The rescission is the second rebuff of Evergrande’s asset sale since Yuexiu Property, a state-owned developer controlled by the Guangdong provincial authorities, dropped its US$1.7 billion bid on October 15 to buy the 26-storey Evergrande Centre office tower on the Wan Chai waterfront because of concerns over its unresolved debt, according to a Reuters report, citing two unidentified people familiar with the matter.

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