Evergrande shares fall as trading resumes in Hong Kong stock market
Beijing, Oct. 21 (EFE).- The shares of the indebted Chinese real estate giant Evergrande fell by 10.5 percent in the opening session of the Hong Kong stock market Thursday as trading resumed after more than two weeks of suspension.
The plunge comes following a breakdown in negotiations for the sale of a major subsidiary to the promoter Hopson.
The shares of the subsidiary in question, the real estate management company Evergrande Property Services, was also re-listed Thursday and faced an eight percent drop at the opening session.
On the other hand, Hopson Development – which was to acquire the majority stake in Evergrande Property Services – opened with gains of 0.9 percent which increased to 5.2 percent after an hour and a half of trading.
The negotiations between the two companies involved the sale of 50.1 percent of Evergrande’s subsidiary to Hooplife, a Hopson subsidiary, for HK20.04 billion ($2.6 billion).
While several media entities claimed the deal was derailed for not having secured the approval of the Chinese authorities, Evergrande and Hopson blamed one another for not adhering to the terms of the agreement reached between them.
The deal was part of the Evergrande group’s plans to alleviate its liquidity problems that have generated significant international concerns over its ability to cope with its accumulated liabilities of more than $300 billion.
Evergrande said in a statement that it would continue to try and negotiate the renewal or extension of its debts, or reach other alternative agreements with creditors, but warned that there was no guarantee that it would be able to meet its financial obligations.
This week, the 30-day extension ends for Evergrande regarding the payment of the interest owed on an offshore bond – about $84 million – that was originally due on Sep.23.
If it fails to make the payment, the company will have been considered to have officially defaulted. EFE
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