Evergrande’s second-largest shareholder plans to sell its entire stake

HONG KONG, Sept. 23 (Reuters) – Chinese Estates Holdings (0127.HK), the second largest shareholder in struggling developer China Evergrande (3333.HK), on Thursday said it had sold its stake in Evergrande for $ 32 million and planned to completely exit the operation.

“Directors are cautious and concerned about the recent development of the China Evergrande group, including certain disclosures made by the China Evergrande group on its liquidity,” Chinese Estates said in a filing on the Hong Kong Stock Exchange.

With liabilities of $ 305 billion, Evergrande is struggling to honor its debts and investors fear the rot could spread to creditors, including banks in China and abroad.

Chinese Estates shares jumped 15.1% early in trading to HK $ 2.51, recording the biggest daily percentage gain since June 2020.

China Evergrande stock climbed 32%, the largest daily percentage increase since listing in November 2009, after its unit said Wednesday it “resolved” a coupon payment on an onshore bond. Read more

Chinese Estates, which held around 6.50% of Evergrande’s equity as of September 10 according to data from Refinitiv Eikon, said it has demanded the sale of all or part of the remaining 5.66% of Evergrande in the market or by through bulk transactions.

The transfer mandate will be valid for 12 months from the date of a general meeting of shareholders on September 23 to approve the sale, he said.

Chinese Estates said it has already sold 108.91 million shares, or 0.82%, of Evergrande’s issued share capital between August 30 and September 21 for HK $ 246.5 million ($ 32 million) .

The company has estimated that if the entire stake is sold, it will realize a loss of approximately HK $ 9,486.3 million ($ 1.22 billion) for the year ending December 2021.

The proceeds from the divestitures will be used for general working capital and for reinvestment when opportunities arise, he added.

($ 1 = 7.7860 Hong Kong dollars)

Reporting by Donny Kwok; Editing by Anne Marie Roantree and Muralikumar Anantharaman

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