In attempts to avoid a default on their debts, the Chinese developer China Evergrande, who has a lack of money, sell shangjing bank shares in the amount of 9.9 billion yuan (about $ 1.546 billion) for liquidity. Reports about it Reuters with reference to the company’s statement.
1.75 billion shares at a price of 5.7 yuan (0.88 dollars) will be sold within the agreement. Sold by Evergrande Part of the shares will be 19.93 percent of the issued share capital of Shengjing Bank. After purchasing shares, the share of Shenyang Shengjing in the bank will increase to 20.79 percent, which will make the company with its largest shareholder. At the same time, the share of Evergrande will decrease from 34.5 to 14.75 percent.
As stated by the head of Evergrande Hui Ka Yang, the problem of liquidity Evergrande has significantly affected Shengjing Bank. The sale of shares of the state company will help stabilize the activities of the Bank, while at the same time, the developer will be able to increase and maintain the cost of its remaining share in Shengjing Bank.
In the first half of 2020, the debt of the developer in front of the bank was seven billion yuan. With such a sum of obligations, the Bank was the third largest offshore lender Developer, according to the data of the Brokerage company CCB INTERNATIONAL. Shengjing Bank, as one of the main Evergrande creditors, demanded that the clean revenue from the sale was used to repay the debt before it. The requirement suggests that Evergrande will not be able to use funds for other purposes.
The developer has already missed the period of interest on dollar bonds earlier in September. Another period of interest payments in the amount of $ 47.5 million on September 29 is expected. The total debt of the developer is 302 billion dollars.
Evergrande shares grew on September 29, 16.1 percent. It is expected that the situation with the largest Chinese developer Evergrande will affect the global economy, markets and the financial system of China. Investors are alerted due to the fact that in the case of a default, the real estate sector of China, banks and the economy as a whole are injured. The People’s Bank of China (NBK) promised to protect housing buyers with an infusion of more money in the banking system. The NBK will put in the priority of small investors of the real estate sector in front of foreign stock holders, which have encountered risks due to the threat of Evergrande collapse.