Evergrande is planning a market update on ‘money transection.’
Image credit: Global Times
Evergrande’s stock has been suspended as investors await a comment on the company’s future.
The crisis at the world’s most indebted property developer has sparked fears that it could collapse, sending shockwaves through global markets. The trade halt was announced before of “an announcement containing inside information about a large transaction,” according to the firm.
It comes as a rival real estate firm is rumoured to be in talks to buy a majority stake in an Evergrande property. Evergrande Group’s shares have been halted from trading “waiting the release by the Company of an announcement containing inside knowledge regarding a substantial transaction,” according to a regulatory statement to the Hong Kong Stock Exchange.
As per Chinese news site Cailian Press, rival Hong Kong-listed property business Hopson Development is set to buy a 51 percent share in Evergrande Real Estate for roughly $5 billion.
Hopson has yet to respond to the report, although trading in its shares has been halted until an announcement “in respect to a large transaction.”
Evergrande has had difficulty making payments to investors in its bonds and wealth management products in recent weeks.
The cash-strapped company announced last Thursday that its wealth management business had made a 10% payback on its products, which are mostly owned by Chinese retail investors. In contrast, reports from international bondholders claim that the corporation has failed to make interest payments on time.
The corporation has a 30-day grace period under its investment agreements before the missed payments become a default.
In recent weeks, the corporation has taken attempts to collect money due to consumers, investors, and suppliers. It said last week that it was selling a $1.5 billion interest in a commercial bank. The sale revenues will be used to repay Evergrande’s debts to Shengjing Bank, one of the company’s primary lenders.
The company’s entire liabilities represent almost 2% of China’s GDP. This has raised fears that the country’s woes would spread to the world’s second largest economy, causing shockwaves throughout the global financial system.