Indebted China Evergrande gets nod to list property services operation

Friday, September 25, 2020

China Evergrande (3333) has received approval from Hong Kong Exchanges and Clearing (0388) to spin off its property management segment, paving the way for the company to raise much-needed capital, Bloomberg reported.

The unit, recently valued at US$11 billion (HK$85.8 billion) in a stake sale to strategic investors, is seeking an initial public offering, said people familiar with the matter. If Evergrande pulls off the listing, it could replenish the indebted developer’s finances.

This comes at a time strategic investors have the right to demand the company pay them US$19 billion in January if it can not complete a targeted listing in China.

The world's most indebted developer yesterday said it would take legal action against those who made up a fake company document claiming it is asking support from Guangdong province to approve its long-delayed A-share backdoor listing plan given surging default risk.

S&P Global also cut its outlook on Evergrande’s B+ credit rating to negative from stable yesterday.

Shares of the developer dived by 8.28 percent at HK$13.96 as of 1:30 pm, while China Evergrande New Energy Vehicle (0708) slumped by 12.55 percent to HK$16.86. Trading of the company's three bonds in the mainland Shanghai market was once suspended after the prices dropped below their lower trading limits.