China Evergrande to sell $1.5 bln stake in Shengjing Bank to state firm (updated)

Shengjing Bank Co

29/09/2021 01:50

(Adds details on stake sale, quote, background)
    HONG KONG, Sept 29 (Reuters) - Cash-strapped China
Evergrande Group  3333.HK  said on Wednesday it plans to sell a
9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank
Co Ltd  2066.HK  to a state-owned asset management company as it
scrambles to raise funds. 
    After missing a bond interest payment last week, Evergrande
faces a big test on Wednesday with the deadline of another
coupon payment of $47.5 million that investors are watching
closely.  urn:newsml:reuters.com:*:nL1N2QU325
    Evergrande has rapidly become China's biggest corporate
headache as it teeters between a messy meltdown with
far-reaching impacts, a managed collapse or the less likely
prospect of a bailout by Beijing.  urn:newsml:reuters.com:*:nL4N2QG1T9    
    The 1.75 billion shares, representing 19.93% of the issued
share capital of the bank, will be sold for 5.70 yuan apiece to
Shenyang Shengjing Finance Investment Group Co Ltd, a
state-owned enterprise involved in capital and asset management,
China Evergrande said in a filing to the Hong Kong bourse.
    Shenyang Shengjing's stake in the bank will be increased to
20.79% after the deal to become the bank’s largest shareholder. 
    "The company’s liquidity issue has adversely affected
Shengjing Bank in a material way," Evergrande Chairman Hui Ka
Yan said in the statement.
    "The introduction of the purchaser, being a state-owned
enterprise, will help stabilise the operations of Shengjing Bank
and at the same time, help increase and maintain the value of
the 14.75% interest in Shengjing Bank retained by the company." 
    Beijing is prodding government-owned firms and state-backed
property developers to purchase some of embattled China
Evergrande Group's assets, people with knowledge of the matter
told Reuters this week. urn:newsml:reuters.com:*:nL1N2QU37K
    Shengjing Bank demanded that all net proceeds from the
disposal be applied to settle the relevant financial liabilities
of the group due to Shengjing Bank, Evergrande said. 
    Its stake in the bank would be reduced to 14.75% from 34.5%.
    
    

 (Reporting by Donny Kwok and Anne Marie Roantree; Editing by
Kim Coghill and Stephen Coates)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470;))