Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China Evergrande sells entire stake in streaming platform HengTen to ease debt burden

Stock MarketsNov 18, 2021 02:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The China Evergrande Centre building sign is seen in Hong Kong, China, September 23, 2021. REUTERS/Tyrone Siu 2/2

By Clare Jim and Indranil Sarkar

HONG KONG (Reuters) -China Evergrande Group is selling its entire stake in streaming services firm HengTen Network Group for HK$2.13 billion ($273.5 million), as the cash-strapped developer boosts efforts to avoid a debilitating default on its debts.

Evergrande, the world's most indebted developer, said on Thursday it would book a loss of HK$8.5 billion from selling the 18% stake in HengTen, in which Chinese gaming and social media giant Tencent Holdings (OTC:TCEHY) holds around a 20% share.

The Shenzhen-based real estate company has been stumbling from deadline to deadline in recent weeks as it grapples with more than $300 billion in liabilities, $19 billion of which are international market bonds.

A wholly owned unit of Evergrande entered into an agreement with Allied Resources Investment Holdings Ltd, owned by investor Li Shao Yu, to sell 1.66 billion HengTen shares at HK$1.28 per share, at a discount of 24% to its closing price on Wednesday.

The latest share disposal extends Evergrande's sell-down of its HangTen stake from 26.55% in the secondary market since early this month.

Shares of Evergrande dropped 5% in afternoon trade, while HengTen, which streams and produces film and television programmes and has been described as China's Netflix (NASDAQ:NFLX) by Chinese media, jumped 23%.

Evergrande's bonds due March 2022 rose 1.997 cents to 32.2 on the dollar, according to Duration Finance.

The developer said in the filing that 20% of the deal consideration will be payable within five business days from the date of the agreement, while the remainder will be completed within two months.

Investors are on tenterhooks as they wait to see if Evergrande, which failed to pay coupons totalling $82.5 million due on Nov. 6, can meet its obligations before the 30-day grace period expires on Dec 6.

Other Chinese property developers are also stepping up financing efforts via share sales as liquidity in the offshore bond market dries up due to fears over any contagion from Evergrande's troubles.

Country Garden Services Holdings, the property services unit of top developer Country Gardens, raised $1 billion on Thursday from placing 4.5% of enlarged shares, two sources with direct knowledge of the matter told Reuters.

The company sold 150 million new shares at HK$53.35 each, a 9.5% discount to the last traded price of HK$58.95 on Wednesday. Its shares were suspended from trading on Thursday, while those of parent Country Garden dropped 4.3%.

Smaller rival Agile Group also said on Thursday it sold convertible bonds worth HK$2.4 billion based on the initial exchange price of HK$27.48 per share of its property management unit A-Living Smart City Services.

Shares of A-Living tumbled 8.3% to HK$21 on Thursday.

Agile said it has remitted funds to repay its $190 million senior notes due Thursday.

LIQUIDITY SQUEEZE

"The market has expected fund raising activities in the sector because if mainland China does not loosen liquidity, it'll be difficult for the property firms to get large loans from financial institutions," said Castor Pang, head of research of Core Pacific in Hong Kong, adding that slowing home sales also hurt developers' cashflow.

The new issuance followed a share sale and a stake disposal in its property management unit by Sunac China, among the top four developers in the country, early this week, raising a total of $949.70 million.

CIFI Holdings also raised $214.5 million via a rights issue earlier in November, while Shimao Services raised a total of HK$4.8 billion via a new share placement as well as convertible bonds.

On top of the debt market pressures, Chinese property developers are also facing stiff challenges from an array of unprecedented policy tightening steps by Beijing to curb speculative buying.

China Vanke told its staff on Tuesday they need to raise their "crisis awareness" and cut unnecessary spending akin to being in "war time", according to a person with direct knowledge.

Last week, Evergrande once again averted a destabilising default with a last-minute bond payment but the reprieve did little to alleviate strains in the country's wider property sector from a liquidity crunch.

Evergrande has new coupon payments totalling more than $255 million due on Dec. 28. It has come under pressure from its other creditors at home and a stifling funding squeeze has cast a shadow over hundreds of its residential projects.

Chinese authorities have urged Evergrande Chairman Hui Ka Yan, 63, to use some of his personal wealth to help pay bondholders, two people with knowledge of the matter told Reuters last month.

Its founder is now freeing up funds from luxury assets including art, calligraphy and three high-end homes, according to filings and a person with knowledge of the matter.

($1 = 7.7889 Hong Kong dollars)

China Evergrande sells entire stake in streaming platform HengTen to ease debt burden
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email