Shares of China Evergrande Group jumped early on Monday, a day after the embattled developer said it would appoint an official from a unit of state asset manager China Cinda Asset Management to its board.
Evergrande’s assets are expected to be taken over by state-owned firms in a restructuring led by the Guangdong provincial government, where the developer is based, and the appointment could signal that restructuring is moving forward.
Shares of the developer, which jumped by more than 13% before closing nearly 4% up, also drew support from a report on Friday by financial intelligence provider REDD that said the provincial government was aiming to release a framework debt restructuring plan for Evergrande by March.
Among other gainers were Agile Group and Shimao Group, which rose 7.6% and 3.3% respectively, on news related to asset sales to state-backed firms. The Hang Seng Mainland Properties sub-index edged up 0.6%.
Group seeks more time from foreign bondholders
On Monday Evergrande sought more time from overseas creditors to formulate a debt restructuring plan that benefits all stakeholders and urged them not to take any ‘radical’ legal actions.
The developer plans to separate the company’s offshore assets and sell them to pay off foreign debt, in a boost to foreign lenders’ hopes of recouping some funds, the report on Friday said.
Evergrande is the world’s most-indebted property company with more than $300 billion in liabilities, including nearly $20 billion of international bonds all deemed to be in default after a run of missed payments late last year.
The developer said on Sunday it would appoint two new board members, including non-executive director Liang Senlin, chairman of China Cinda (HK) Holdings Company Ltd, a unit of one of the country’s four biggest state asset managers.
Evergrande set up a risk management committee last month mostly comprising senior officials from state entities including China Cinda Asset Management.
The other new director is Siu Shawn, chairman of China Evergrande New Energy Vehicle Group Ltd. The company said in October it would prioritise the growth of its nascent EV business over its troubled core real estate operations.
Yuzhou to default on dollar bonds
China’s property firms have struggled in the wake of Beijing’s drive to curb excessive debt in the real estate sector, as well as address rampant consumer speculation.
Another struggling developer, Yuzhou Group, which has more than $5 billion in dollar debt, said it will default on two dollar bonds worth over $100 million due this week, in a filing to the Hong Kong stock exchange on Monday.
Agile, Shimao sell project stakes
In recent days, stressed property companies Agile Group and Shimao Group have also announced sales of stakes in companies to state-owned enterprises.
Guangzhou-based Agile said on Monday it sold its 26.7% stake in a mixed-used complex to one of its joint-venture partners, state-owned developer China Overseas Land (COLI), for 1.84 billion yuan ($291 million).
The complex is Guangzhou Asian Games City, and COLI owned 20% interest in it before the purchase.
Shimao, which holds a 26.7% stake in the same complex, is also trying to sell its stake to COLI, local media Cailianshe reported. Shimao did not respond to a request for comment.
Last week, Shimao said it had sold a commercial land plot in Shanghai for 1.06 billion yuan to a company owned by the Shanghai municipal government to reduce its debt.
• Reuters and AFP with additional editing by Jim Pollard
This report was updated on Monday January 24, 2022 with new details.