HONG KONG/SHANGHAI: Teetering Chinese property giant China Evergrande formally abandoned plans to sell a $2.6 billion stake in one of its key units on Wednesday, as Beijing officials went out in force to say the problems would not spin out of control.
Once China’s top-selling developer and now reeling under more than $300 billion of debt, Evergrande was in talks to sell at 51 percent stake in its Evergrande Property Services arm to smaller rival Hopson Development Holdings.
In a stock exchange filing late on Wednesday, Evergrande said that the company had reason to believe that Hopson had not met the “prerequisite to make a general offer” for its unit. It did not elaborate further.
In a separate exchange filing, Evergrande said barring its sale of a stake worth $1.5 billion in Chinese lender Shengjing Bank Co. Ltd., there had been no material progress on sale of other assets it has put on the block.
Evergrande’s disclosures came after a number of Chinese officials had sought to reassure homebuyers and markets that the rout in the property sector would not be allowed to trigger a full-scale crisis.
Worries that a cash crunch at Evergrande, whose liabilities equal to 2 percent of China’s gross domestic product, could cause economic contagion have resulted in its debt-laden peers being hit with a wave of credit rating downgrades, while some smaller have already defaulted on their bonds.
In comments reported by state media Xinhua and echoing words from country’s central bank late last week, Vice Premier Liu told a Beijing forum on Wednesday that the risks from the current troubles were controllable and that reasonable capital demand from property firms was being met.
