June 26, 2022

FILE PHOTO: The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo

Financially stressed Chinese property developer Evergrande Group has announced to sell its entire stake in HengTen Network Group, China’s streaming services firm. Through the sale it aims to raise HK$2.13 billion ($273.5 million) in order to avoid default on its debts.

According to the developer, it is planning to book a loss of HK$8.5 billion by selling the 18% stake in the video streaming company.

Evergrande reported that its wholly owned unit has entered into an agreement with Allied Resources Investment Holdings Ltd. The agreement entails the former to sell 1.66 billion HengTen shares at HK$1.28 per share. While it has decided to sell the shares at a discounted rate of 24% to its closing price on Wednesday.

The company’s shares in late morning trade fell 2.5%, while HengTen’s shares jumped 22.5%.

According to Evergrande’s Hong Kong stock exchange filing, 20% of the deal consideration with HengTen will be payable within five business days from the date of the agreement, while the remainder will be transacted within two months.

As liquidity in the offshore bond market dries up due to fears over contagion from Evergrande’s trouble, other Chinese property developers are also stepping up financing efforts via share sales.

The troubled property developer’s smaller rival Agile Group based on the initial exchange price of HK$27.48 per share of its property management unit A-Living Smart City Services announced that it sold convertible bonds worth HK$2.4 billion.

According to Agile, the fund raising is beneficial to the company given the recent market conditions. It has also forwarded funds to repay its $190 million senior notes due Thursday.

Sunac China, which is among the top four developers in the country reported that early this week it raised a total of $949.70 million by issuing new shares and selling a stake in Sunac Services.

Evergrande is due on Dec. 28 to pay new coupon payments totalling more than $255 million soon.

The company has come under pressure from its other creditors in the home country and a stifling funding squeeze that has cast a shadow over hundreds of its residential projects.