ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Property

China's indebted Evergrande to sell stakes in internet unit

Worries have intensified over potential for system financial risk

Fitch downgraded its credit rating for Evergrande on Wednesday, signaling its concern of a potential default.   © Reuters

HONG KONG (Reuters) -- China's most indebted property developer Evergrande Group has agreed to sell stakes in its internet unit HengTen Networks Group worth a total of HK$3.25 billion ($418.2 million), an exchange filing showed on Sunday.

Worries over the developer's debt and the potential for systemic financial risk have intensified after Evergrande said in June its project companies had not paid some commercial paper on time, but it said it was arranging payment.

Fitch downgraded its credit rating on Wednesday, signalling its concern of a potential default.

To ease the pressure, Evergrande will sell a 7% stake at HK$3.20 per share to a unit of Tencent Holdings for HK$2.07 billion and a 4% stake to an unidentified buyer for HK$1.18 billion. The filing did not give a timing for the sale.

Before the transaction, Evergrande held a 37.55% stake in the company, while Tencent held 16.9%. Evergrande’s stake will go down to 26.55% and Tencent’s holdings will increase to 23.9% after the sale, the filing showed.

Evergrande has agreed to provide a 5-year loan of HK$2.07 billion to HengTen to support its business development, the company added in the filing.

HengTen’s shares are expected to resume trading on Aug. 2 after being halted on July 29, the filing showed. 

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Discover the all new Nikkei Asia app

  • Take your reading anywhere with offline reading functions
  • Never miss a story with breaking news alerts
  • Customize your reading experience

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more