Hopson says it considers agreement to buy Evergrande unit to be ‘legally binding’ despite cancellation

China Evergrande rival Hopson Development Holdings Limited, which had sought to buy half of the embattled developer’s property management unit, still considers the purchase agreement “legally binding” despite Evergrande rescinding the sale on October 12, according to a company filing with the Hong Kong stock exchange.

“Having sought legal advice, the company considers the agreement legally binding and the acquisition is not subject to the fulfilment of any conditions precedent,” Hopson said in a late filing on Thursday. The filing by Hopson complicates an increasingly messy restructuring saga for Evergrande, the world’s most indebted developer.

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cent of Evergrande Property Services for HK$20.04 billion (US$2.58 billion) failed to materialise because Evergrande rescinded the sale on October 12, according to a Wednesday filing by Hopson. The Shenzhen-based developer, facing US$300 billion in liabilities, is coming up against a 30-day grace period to pay US$83.5 million of coupon payments for an offshore bond, which was missed on September 23.

In its Thursday filing, Hopson said it “has actively taken all necessary actions in a timely manner to prepare for completion of the acquisition, including setting aside funds for part payment of the consideration as required under the agreement.” Evergrande, however, requested Hopson “to make substantial changes to the agreed terms, including among others, the terms of payment of the consideration by paying the consideration to the vendor directly instead.”

Hopson, in its filing, said this was “unacceptable” and that it was “advised by its financial advisers that such a proposed payment arrangement” was not in its interests.