China Evergrande shares plummet after $2.6 billion asset sale falls through

Shares of heavily indebted China Evergrande sank on Thursday after a $2.6 billion deal to sell the developer’s assets to a smaller rival fell through.

Once one of China’s top real estate companies, Evergrande is now more than $300 billion in debt. The developer was negotiating an opportunity to sell a 50.1% stake in its Evergrande Property Services arm to Hopson Development Holdings.

However, the talks ended in deadlock, Hopson announced on Wednesday. Evergrande confirmed the termination of the deal in a separate filing.

The news sent Evergrande’s shares plummeting by as much as 12.5% while shares in Evergrande Property Services dropped 8%. Meanwhile, Hopson Development Holdings stock rose 12.4%.

The collapsed deal is reportedly Evergrande’s second failure amid its desperate attempts to raise cash over the past weeks. Earlier, Reuters reported that the $1.7 billion sale of the group’s Hong Kong headquarters had failed last week due to an unnamed buyer’s worries over Evergrande’s financial situation.

The setback also comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond. If the troubled developer cannot pay, it would be considered in default.

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