Evergrande seeks sale of Hong Kong residential project: sources

[HONG KONG] China Evergrande Group is seeking to sell a residential project in Hong Kong, people familiar with the matter said, as it ramps up divestments to avert a cash crunch.

The debt-laden developer is looking to sell the site in the Yuen Long area of the New Territories for HK$8 billion (S$1.39 billion), one of the people said, asking not to be identified because the matter is confidential. That's lower than the HK$8.9 billion it paid to acquire the project.

Sing Tao Daily reported the sale plans earlier. Representatives for Shenzhen-based Evergrande didn't immediately respond to a request for comment.

The world's most indebted developer is facing mounting pressure to curtail its borrowings, fuelling concerns that it may rush to offload assets cheaply.

Regulators last week issued a rare public rebuke of the company, urging it to address its debt woes. With more than US$300 billion of liabilities, the conglomerate's fate has broad implications for China's financial system.

"Evergrande may accelerate asset sales after last week's rebuke and instruction to resolve its debt problems from China's central bank and financial regulator," Bloomberg Intelligence analysts including Patrick Wong and Lisa Zhou wrote in a note.

Shares of Evergrande fell as much as 2.2 per cent in Hong Kong trading on Wednesday, taking this year's decline to 70 per cent.

Evergrande acquired the Yuen Long project from Henderson Land Development, firstly by purchasing undeveloped farmland for HK$4.7 billion in mid-2019. Earlier this year it paid a HK$4.2 billion premium to convert it into a residential development, according to the Hong Kong Economic Times.

BIG SALE

Evergrande and its electric vehicle and property services units tumbled earlier this week after Sing Tao Daily reported that the company may sell its Hong Kong headquarters building for HK$10.5 billion, less than the acquisition cost of HK$12.5 billion.

Bloomberg Intelligence (BI) estimates sales of Evergrande's Hong Kong properties and listed shares may cut its total debt by about 17 per cent. The firm could lower its borrowings by about 14 per cent from 570 billion yuan (S$119.26 billion) by offloading its entire stakes in four Hong Kong-listed companies, including a small holding in property service firm E-House China Enterprise Holdings, for HK$94 billion, based on their closing prices on Aug 23, the BI analysts wrote.

Evergrande said earlier this month it's in discussions to sell stakes in its electric vehicle and property services units. Last week it said preliminary talks between China Evergrande New Energy Vehicle Group and Xiaomi to introduce strategic shareholders had ended.

Evergrande New Energy Vehicle shares fell as much as 9.2 per cent in Hong Kong, while Evergrande Property Services Group rose as much as 5.6 per cent before paring the gains. HengTen Networks Group, an Internet unit which Evergrande is trimming its stake in, slid 6.3 per cent.

BLOOMBERG