By Sherry Qin
China Evergrande’s shares fell early Monday after the property developer scrapped a $35 billion debt-restructuring plan designed to ensure its survival and said it is unable to issue new debt.
Shares declined 19.1% to 0.45 Hong Kong dollars (US$0.06). China Evergrande’s fall also weighed on other mainland property stocks listed in Hong Kong, with Shimao Group Holdings declining 7.95% and Guangzhou R&F Properties dropping 6.6%.
The troubled property developer said in an exchange filing on Friday that it needed to cancel key creditor meetings and scrap its restructuring plan due to worse-than-expected property sales and that it would search for another path forward that “reflects the company’s objective situation and the demand of the creditors.”
The world’s most indebted developer proposed plans for restructuring in March to its creditors with options to swap debt for new bonds and equity-linked instruments. The company’s total liabilities at the end of June amounted to 2.39 trillion yuan (US$327.49 billion).
Without a new deal, bondholders who lent around $15 billion to Evergrande could pursue a liquidation of the company, which could further weigh on China’s already crippled real-estate market.
In a separate exchange filing on Sunday, China Evergrande said it is unable to issue new notes as its onshore subsidiary, Hengda Real Estate Group, is being investigated.
In August, Hengda said it was being investigated by the China Securities Regulatory Commission for potential violations over the disclosure of information.
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