China Evergrande Group to Sell Meaningful Stake in Shengjing Bank to SOE

Posted on 09/29/2021

Debt-plagued China Evergrande Group revealed plans to sell a 9.99 billion yuan (US$ 1.5 billion) stake, or 19.93% stake (1.75 billion shares), in Shengjing Bank Co Ltd to a state-owned asset management company – Shenyang Shengjing Finance Investment Group Co Ltd. Shengjing Bank is one of the main lenders to Evergrande Group. Some estimates show that Shengjing Bank had 7 billion yuan in loans to Evergrande Group. Shengjing Bank demanded that all net proceeds from the bank stake disposal be used to settle the financial liabilities of the property developer due to the lender, Evergrande said in an exchange filing. Evergrande Group missed a bond interest payment last week. Shenyang Shengjing Finance Investment Group’s stake in Shengjing Bank will be increased to 20.79% after the deal and they will become the bank’s largest shareholder. Evergrande Group’s stake in the bank would be lowered to 14.75% from 34.5% ownership.

“The company’s liquidity issue has adversely affected Shengjing Bank in a material way,” Evergrande Group Chairman Hui Ka Yan said in the statement.

“The introduction of the purchaser, being a state-owned enterprise, will help stabilize 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.”

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