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Investing.com – China Evergrande Group (HK:3333) shares slid after a deal to sell a $2.6 billion stake in its property services unit collapsed, in its latest setback.
The developer’s Hong Kong shares tumbled 12.88% to HK$2.57 ($0.33) by 11:26 PM ET (3:26 AM GMT), after sliding as much as 14% earlier in the session. Trading in the shares had been suspended since Oct. 4.
China Evergrande said on Wednesday that a deal to sell a 50.1% stake in Evergrande Property Services Group (HK:6666) to Hopson Development Holdings Ltd. (HK:0754) was scrapped, with Hopson failing to meet the “prerequisite to make a general offer”.
However, Hopson retaliated by saying it does not accept “there is any substance whatsoever” to China Evergrande’s termination of the sales agreement and added that it is exploring options to protect its legitimate interests.
Trading in Hopson and Evergrande Property Services shares also resumed on Thursday.
This is the second deal that has failed to come through for China Evergrande, with the $1.7 billion sale of its Hong Kong headquarters collapsing amid buyer concerns over the developer’s financial situation, according to Reuters.
The collapse of the deal with Hopson comes as a 30-day grace period for China Evergrande to pay $83.5 million in coupon payments for an offshore bond is set to expire. Should the company fail to make the payments, it will be considered in default.
Although the collapsed deals mean that China Evergrande will have to find another way to pay off its more-than-$300 billion debt, authorities have attempted to calm fears by saying that the company’s debt woes will not spiral out of control and trigger a broader financial crisis.
In another development in the Chinese property sector on Thursday, Modern Land China Co. Ltd. (HK:1107) said it has ceased to seek consent from investors to extend the maturity date of a dollar bond due on Oct. 25. The company’s shares were suspended from trading on Thursday.
