Debt-mired Chinese developer Evergrande Group has announced plans to offload a $1.5bn (CNY9.99bn) stake in Shengjing Bank amid the ongoing debt crisis.
State-owned Shenyang Shengjing Finance Investment Group has come forward to buy 1.75 billion non-publicly traded domestic shares of the lender.
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Upon the completion of the CNY5.70 per share deal, real estate developer Evergrande Group’s 34.5% stake in the bank would drop to 14.57%.
Commenting on the sale, Evergrande Group said: “The company’s liquidity issue has adversely affected Shengjing Bank in a material way.
“The introduction of the purchaser, being a state-owned enterprise, will help stabilise the operations of Shengjing Bank and at the same time, help increase and maintain the value of the 14.75% interest in Shengjing Bank retained by the company.”
This move is part of the Chinese authorities’ plan to contain the fallout of Evergrande Group’s liquidity crisis as it is said to have accumulated over $300bn in liabilities.
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By GlobalDataShengjing Bank, which is also one of the lenders to Evergrande, has demanded that all the net proceeds from the sale should be used to settle the financial liabilities of the developer to the lender.
Earlier this week, the Hong Kong Monetary Authority (HKMA) had sought reports from lenders on their exposure to a troubled Chinese developer.
Last week, the Chinese central bank had infused $18.6bn (CNY120bn) into the banking system to address concerns raised by the Evergrande crisis.
