Wrapup 1: China Evergrande sells entire stake in streaming platform HengTen to ease debt burden

A-Living Smart City Services

18/11/2021 04:27

(Adds Country Garden Services, Agile, Vanke, share prices)
    By Clare Jim and Indranil Sarkar
    HONG KONG, Nov 18 (Reuters) - China Evergrande Group
 3333.HK  is selling its entire stake in streaming services firm
HengTen Network Group  0136.HK  to raise 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  0700.HK  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 2.5% in late morning trade,
while HengTen, which streams and produces film and television
programmes and has been described as China's Netflix by Chinese
media, jumped 22.5%.
    Evergrande said 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, according to the Hong Kong stock exchange filing.
    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  6098.HK , the property
services unit of developer Country Gardens  2007.HK , is selling
150 million new shares, representing 4.5% of the enlarged
capital, to raise $1.03 billion, according to a term sheet seen
by Reuters on Thursday.
    The selling price is HK$53.35 ($6.85) each, a 9.5% discount
to the last traded price of HK$58.95 on Wednesday. Country
Garden Services said it will use the proceeds for future
acquisition opportunities and new business development. 
    The company's shares were suspended from trading on
Thursday, while those of parent Country Garden dropped 3.2%.
    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  3319.HK .
    When fully converted, the bonds will represent 6.2% of
A-Living's issued share capital. Shares of A-Living tumbled 8.3%
to HK$21 on Thursday.
    Agile said the fund raising is beneficial to the company
considering the recent market conditions. The company said it
has remitted funds to repay its $190 million senior notes due
Thursday. 
    Early this week, Sunac China  1918.HK , among the top four
developers in the country, said it raised a total of $949.70
million by issuing new shares and selling a stake in Sunac
Services  1516.HK .  urn:newsml:reuters.com:*:nL1N2S602K
    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  2202.HK   000002.SZ  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.  urn:newsml:reuters.com:*:nL1N2S207Z
    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.  urn:newsml:reuters.com:*:nL1N2S70F4
    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. 
    Construction company Shanghai Trendzone Holdings  603030.SS 
said on Wednesday it is suing Evergrande and its units for
missing payments worth $38.3 million.  urn:newsml:reuters.com:*:nP8N2S200W

 ($1 = 7.7889 Hong Kong dollars)

 (Additional reporting by Joy Leung, Anne Marie Roantree and
Scott Murdoch in Hong Kong and Shuyan Wang in Beijing; Editing
by Jacqueline Wong & Shri Navaratnam)
 ((Indranil.Sarkar@thomsonreuters.com; Mobile:  +91
7022132226;))