HONG KONG: China Evergrande Group is in talks to sell stakes in multiple subsidiaries, Reuters reported, citing an unidentified source.
Assets under talks include stakes in the developer’s new-energy vehicle and property service unit, both listed in Hong Kong, Reuters cited the source as saying.
Evergrande is also seeking buyers for its urban renewal projects in Shenzhen, Reuters cited two sources.
Evergrande has been offloading assets and listing units in an attempt to stave off a cash crunch.
Evergrande’s equity and bond holders have been rattled in recent weeks by a slew of reports about wary banks and unpaid dues to suppliers. Last week, a Caixin report saying that creditor lawsuits against Evergrande would be consolidated triggered another slump in the developer’s bonds.
Potential sources of future funding for Evergrande include placements for its listed electric vehicle and property management units, and initial public offering for operations including its beverage business, FCB, and amusement park and tourism properties, Fitch Ratings said earlier.
The Shenzhen-based developer has some US$80bil (RM338.3bil) worth of equity in non-property businesses that could help generate liquidity if sold, Agnes Wong, a Hong Kong-based analyst with BNP Paribas SA, wrote in a June report.
While the electric vehicle (EV) unit is one of the better valued assets of Evergrande, it reported a widening preliminary net loss for the first half of about 4.8 billion yuan (US$740mil or RM3.13bil), almost double that of a year earlier, according to a filing late Monday. The loss was mainly attributable to development of new EV businesses “in its early investment stage,” it said.
Evergrande is struggling to allay concerns by investors and ratings firms.
S&P Global Ratings cut Evergrande by two levels to CCC last week, just four notches above the designation for defaulted borrowers. It’s the second downgrade by S&P in less than two weeks and follows similar moves by Fitch and Moody’s Investors Service. —Bloomberg