Evergrande Group's trading halted in Hong Kong as debt test looms

Uncertainty over firm's over $300-bn debt load continues to plague investors

Shares in China Evergrande Group and its property management unit were suspended from trading Monday, as a fresh debt test loomed for the developer underscoring broader risks that have left credit markets on edge. 
 

Hopson Development Holdings Ltd., whose shares were also suspended, plans to acquire a 51% stake in Evergrande Property Services Group Ltd. according to Chinese financial news platform Cailian, citing unidentified people. Cailian amended an earlier report to say the deal would give the unit a valuation of more than HK$40 billion ($5.1 billion). 

Trading of Evergrande was suspended pending an announcement on a “major transaction,” the developer said Monday in a stock exchange filing.  Evergrande Property said it was halted before an announcement on a possible offer for shares in the company.

Uncertainty over the full extent of Evergrande’s debt load, beyond its more than $300 billion reported in liabilities, has plagued investors since a liquidity crisis at the firm stoked fears of a collapse that could trigger financial and economic contagion.  Having already fallen behind on payments to banks, suppliers and holders of onshore investment products, it also hasn’t given any indication that it paid two recent dollar bond coupons.

People familiar with the matter have said that a dollar note maturing Oct. 3 issued at an initial amount of $260 million by an entity called Jumbo Fortune Enterprises is guaranteed by Evergrande. As the maturity is a Sunday, the effective due date is Monday. The issuer is a joint venture whose owners include Hengda Real Estate, Evergrande’s main onshore unit. 

Non-payment of the bond principal would constitute a default as the note has no grace period, although five business days would be allowed if failure to pay is down to administrative and technical error, according to the people. Details of the guarantees weren’t broadly known as the note prospectus isn’t publicly available and the deal wasn’t listed on exchanges. Monday is a holiday in China.

Key Developments:
 

• Hopson Dev.’s USD Bonds Tumble on Evergrande Mgmt Unit Report
• Hopson to Buy 51% of Evergrande Mgmt Unit: Cailian
• Evergrande, Property Management Unit Suspend Hong Kong Trading
• Nervy Markets Await Outcome for Opaque Bond Tied to Evergrande
• China Steps Up Efforts to Ring-Fence Evergrande, Not to Save it
• China Builder Sinic Faces Creditor Demanding $75 Million Payment
• The Evergrande Fear Has Receded Too Easily: John Authers
• Evergrande Sep. Sales Drop 55% M/M Amid Crisis, Data Indicate
• Evergrande Woes Spread to Sweden With EV Unit Seeking New Owners
• Evergrande Pays Back Some Cash Owed to Wealth Product Investors

Company to raise $5 bn from property unit sale

Evergrande will sell a half-stake in its property management unit to Hopson Development for more than $5 billion, Chinese media said on Monday, after both Evergrande and Hopson requested trading halts ahead of a major transaction.
 

Evergrande said the trading halt was pending an announcement about a major transaction and Evergrande Property Services Group said the announcement constitutes "a possible general offer for shares of the company." China's state-backed Global Times said Hopson Development was the buyer of a 51 per cent stake in the property unit for more than $5.1 billion, citing unspecified other media reports. (Reuters)