China Evergrande Group will sell its entire stake in streaming service company HengTen Network Group for $ 2.13 million ($ 273.5 million) as the real estate development group continues to look for ways to boost its liquidity in order to avoid a default.
The company has been trying to meet its debt obligations to its creditors in recent weeks, having accumulated liabilities of more than $ 300 billion with $ 19 billion in international bonds.
Evergrande announced today that it is expected to record losses of Hong Kong $ 8.5 billion from its 18% sale to HengTen.
Shares of Evergrande plunged 5.7% in the aftermath of the announcement, while HengTen rallied 24.9%.
Bankruptcy is very likely, says S&P
Despite Evergrande’s efforts to raise liquidity, S&P Global Ratings said in a report released today that bankruptcy was still “very likely”.
The house even warns that Evergrande has big challenges to face in March and April next year, with US $ 3.5 billion bonds maturing.
“We continue to believe that an Evergrande bankruptcy is very likely,” he said. “The company has lost the ability to sell newly built homes, which means that its core business model is virtually dead. As a result, full repayment of its loans is unlikely.”
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Source From: Capital
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