Commercial Property

Evergrande shares rise as it names state firm official to board

Company has more than $300bn in liabilities, which are deemed to be in default

Evergrande’s assets are expected to be taken over by state-owned firms in a restructuring led by the provincial government of Guangdong. Photograph: IStock

Mon Jan 24 2022 - 07:48

China Evergrande Group shares rose 6.2 per cent on Monday after it named a state firm official to its board, while two of its peers sold some assets to state-owned entities, amid hopes of growing government intervention to aid the crisis-hit property sector.

Evergrande's assets are expected to be taken over by state-owned firms in a restructuring led by the provincial government of Guangdong, where the developer is based, and the naming of an official from a unit of a state asset manager to its board could signal the restructuring was moving forward.

Evergrande’s shares also drew support from a Friday report by Financial intelligence provider REDD that said the Guangdong provincial government was aiming to release a framework debt restructuring plan for the developer by March.

It plans to separate the company’s offshore assets and sell them to pay off foreign debt, in a boost to foreign lenders’ hopes of recouping some funds, the report added.

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Evergrande has more than $300 billion in liabilities, including nearly $20 billion of international bonds all deemed to be in default after a run of missed payments late last year.

The developer said on Sunday it would name two new board members, including non-executive director Liang Senlin, chairman of China Cinda (HK) Holdings Company Limited, a unit of China Cinda Asset Management – one of the country's four biggest state asset managers.

Evergrande set up a risk management committee last month, mostly comprising senior officials from state entities including China Cinda Asset Management.

The other new director is Siu Shawn, chairman of China Evergrande New Energy Vehicle Group Limited .

Evergrande said in October it would prioritise the growth of its nascent EV business over its troubled core real estate operations.

Regulatory curbs on borrowing have driven China’s property sector into crisis, highlighted by Evergrande which was once the country’s top-selling developer but is now the world’s most indebted property firm.

In recent months, Beijing has taken steps to restore stability in the sector, including making it easier for state-backed developers to buy up distressed assets of indebted private firms, according to a source. – Reuters

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