China’s embattled Evergrande property developer races to raise $1.5bn to pay debts

·1-min read

China’s indebted real estate giant Evergrande announced that it will sell off a $1.5bn (£1.1bn) stake it owns in a commercial bank, as the cash-strapped company races to raise money and reduce its massive debt.

In an exchange filing on Wednesday, the company said that it would sell an almost 20 per cent stake it owns (worth about $1.5bn) in Shengjing Bank to a state-owned asset management company.

The company intends to use the proceeds from the sale to settle the debt it owes to the Shengjing Bank – one of the biggest lenders of the company, according to the agreement announced to the Hong Kong Stock Exchange.

The settlement between the bank and Evergrande was welcomed by investors and boosted the share price by 15 per cent on the Hong Kong Stock Exchange.

However, the company still has interest payments outstanding for two offshore bonds – one on Wednesday for $47.5m that it has failed to pay by the end of Asia business hours and one last week for $83m – which it missed.

Both bonds have a grace period of 30 days and if Evergrande fails to pay the interest, they will expire.

Last week, it announced that payment for one of its domestic bonds had been “settled”.

With liabilities of $305bn, Evergrande has spooked investors around the world who are uncertain it can meet its financial obligations. The collapse of China’s second-biggest developer would have a domino effect for both Chinese and global markets.

The company has lost around 80 per cent of its stock market value over the last year.

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