Shares in struggling Chinese property giant Evergrande have fallen sharply after plans to offload a stake in one of its units for $2.6 billion fell through, casting further doubt over whether it can avert the countrys biggest ever corporate failure, The Guardian reported.
The China Evergrande Group, the parent company for the sprawling empire built by a former steel industry executive, was down more than 10 per cent in Hong Kong at midday on Thursday. Evergrande Property Services, one of its most profitable units, was off by 6.45 per cent.
Evergrande announced on Wednesday that it had formally abandoned plans to sell a 50.1 per cent slice of Evergrande Property Services, saying there was “no guarantee” it could meet its financial obligations in order to stay afloat, the report said.
The company, which is China’s second-biggest property developer with thousands of projects, has debts of $305 billion.
But it is running out of cash thanks to a government crackdown on lending, and a slump in property sales and prices, sending shockwaves through the Chinese economy and global financial markets.
The company has been trying to offload assets since September to generate funds to repay the creditors, starting with 1.6 million homebuyers who have bought as-yet unfinished properties off the plan, building contractors and suppliers, and then Chinese banks and bondholders, the report added.
Evergrande also owes billions to offshore bondholders and has already missed several key bond interest payments since September. The company will officially go into default if it fails to stump up $83.5 million when a 30-day grace period for a repayment originally missed in September ends on Monday.
Creditors say Evergrande has not made contact about the repayments and it is widely expected that it will default.