Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

HONG KONG (BLOOMBERG) Shares in China Evergrande Group fell as much as 4.8 per cent on Monday (Nov 29) morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about US$344 million (S$471 million).

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group, also dropped more than 5 per cent after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than US$300 billion in liabilities and the Chinese authorities have told its chairman, Mr Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

Evergrande failed to pay coupons totalling US$82.5 million due on Nov 6 and investors are on tenterhooks to see if the firm can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late last Friday that Mr Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9 per cent from 77 per cent.

Once China’s top-selling developer, Evergrande’s troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. Last Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

In all, China’s stressed developers face nearly US$1.3 billion of bond payments in December, after a month in which investor sentiment towards the property sector showed signs of stabilising despite fresh signs of liquidity pressure.

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The total was US$2 billion in November, and there have been no defaults reported according to Bloomberg-compiled data as at last Friday, after multiple instances in October.

Still, investor scrutiny persists regarding principal and interest payments as a cash crunch engulfs the real estate industry.

Centre stage is Evergrande and Kaisa Group Holdings, two of the country’s biggest dollar-bond issuers.

An Evergrande unit and Kaisa have grace periods ending by mid-December on a combined US$170.9 million of coupons.

November saw yields on a Bloomberg gauge of riskier notes surge to a record 24.6 per cent early in the month before pulling back, amid signals that softer policies are on the way for property firms.

But at around 20 per cent, yields remain too high for most builders that need to refinance imminently maturing debt.


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