China property: Evergrande’s Hengda unit to sell stake in Shantou project for US$19.4 million as Hong Kong court hearing nears
- Hengda Real Estate Group Yuedong is selling its entire 65 per cent stake in Shantou Hengmeng Property Development for US$19.4 million, according to an exchange filing
- A Hong Kong court will hear the company’s debt restructuring proposal on Monday, after adjourning a petition for the seventh time last month
A unit of China Evergrande Group, the most indebted property developer in mainland China, has agreed to sell its stake in a project in Shantou, southern Guangdong province, continuing to pare down assets as it awaits the fate of its debt restructuring proposal.
The subsidiary, Hengda Real Estate Group Yuedong, will sell its entire 65 per cent stake in Shantou Hengmeng Property Development for 137.6 million yuan (US$19.4 million), according to a filing to the Hong Kong stock exchange on Thursday evening.
“The disposal serves to revitalise the group’s projects, promote the resumption of work and construction of existing projects, and safeguard the legitimate rights and interests of project investors, creditors and homebuyers,” Evergrande said in the filing.
03:11
China real estate woes: Evergrande files for bankruptcy protection in New York
As part of the transaction, part of the debt amounting to 376 million yuan owed by Hengda and related parties to Shantou Hengmeng, will be waived.
Shantou Hengmeng is developing a 445.4 acre project in Shantou, a prefecture-level city on Guangdong’s eastern coast.
The sale of the Shantou Jinbi Bay project in the Haojiang district of the city commenced in August 2017. Some 478,800 square metres of the development have been sold, with 1,145 units subject to guaranteed delivery.
The buyer, Shantou Hengyao Property Development, “will fully promote the resumption of work and construction of the project to ensure the realisation of the goals of ‘ensuring the delivery of properties, protecting people’s livelihood, and ensuring stability’,” the statement said.
Evergrande expects to record a gain of about 304 million yuan from the disposal.
Earlier this month, Evergrande rejected claims by financial analysts that changes to its accounting methodology suggested the debt-laden property developer was “never profitable” in its years of operation, stressing that earnings statements for previous years that were audited by PwC received standard unqualified opinion.
The developer belatedly published its 2021 and 2022 annual accounts last August. PwC resigned on January 16 last year, and Evergrande appointed Prism Hong Kong and Shanghai to fill the temporary vacancy.
Evergrande, once China’s biggest home builder by sales, incurred a net loss of 476 billion yuan for 2021 and 105.9 billion yuan for 2022, according to its stock exchange filings in July. It defaulted on a dollar-denominated bond in December 2022, triggering a wave of cross defaults by other mainland developers.
