Indebted Evergrande to sell US$575 million stake in mega project

Troubled Chinese developer Evergrande on Wednesday said it will sell its stake in an incomplete development near Shanghai for US$575 million as it scrambles to find cash to pay its mammoth debts.

The real estate giant is drowning in US$300 billion of liabilities, and has struggled to repay bondholders and investors after a clampdown by Beijing suddenly turned off the liquidity taps.

On Wednesday the developer said it would sell the Crystal City Project, a vast commercial zone in Hangzhou, an eastern city outside of Shanghai for 3.66 billion yuan.

Part of the proceeds from the sale will go to repaying construction fees of 920.7 million yuan, the company said in a filing to the Hong Kong stock exchange.

The remaining cash will be used as “general working capital of the group”, Evergrande added.

“The group’s liquidity issue has adversely affected the development and progress of the group’s projects,” it said.

On Tuesday night, the firm’s Evergrande New Electric Vehicle unit also confirmed in a separate filing that it plans to start mass production of its first electric car on June 22.

It had said Sunday it would start taking orders for the car and open sales centres in 15 major Chinese cities, including in Tianjin, Shanghai and Guangzhou.

But the announcement was unable to prevent the unit’s share price plunging almost 10% on Wednesday after resuming trading.

The auto arm had halted trading on March 21 along with Evergrande Group and Evergrande Property Services.

That came as the developer said it was looking into how lenders have laid claim to deposits of more than 13.4 billion yuan for its property services subsidiary.

But the board of the electric vehicle unit said this “primarily concerns a sister company”, allowing its shares to restart trading.

Evergrande said last week it would not be able to publish its 2021 audited results by the end of March – as Hong Kong’s listing rules require – blaming the delay on Covid-19.

It has repeatedly said it would finish projects and deliver them to buyers in a desperate bid to salvage its debts, and had asked creditors to give the company time.