According to a filing issued ahead of the market opening Thursday, China Evergrande, a huge indebted property developer, plans to generate around $273 million by selling its remaining shares in film production and streaming company HengTen Networks. Evergrande has been on the edge of default for almost a year now.
Earlier this week, the shares of Evergrande declined by 5.7%. Meanwhile, the HengTen shares had a nearly 25% surge in value. Among all Chinese real estate developers, Evergrande is now the largest issuer of U.S. dollar-denominated debt. This group has hovered on the edge of official default for a year now. The business has restarted building on flats owed to customers after making 11th-hour payments. But that’s only a small portion of the developer’s debt.
Evergrande’s attempts for avoiding default
The sale of HengTen, a deal worth 2.13 billion Hong Kong dollars or $273.2 million, is Evergrande’s latest effort to raise capital. Around 20% or $54.6 million of this amount is due within five business days, and the rest in two months.
According to a Hong Kong stock exchange filing, the developer agreed to sell around 1.66 billion HengTen shares to Allied Resources Investment Holdings for 1.28 Hong Kong dollars each on Wednesday. That is 24% below the closing price of HengTen’s Wednesday of 1.69 Hong Kong dollars a share.
The transaction accounts for roughly 18% of HengTen’s shares. In a deal worth 2.07 billion Hong Kong dollars, a Tencent subsidiary agreed to buy 7% of the company from an Evergrande subsidiary, according to a document dated Aug. 1.
A subsidiary of HengTen called Ruyi Films was one of the producers of “Hi, Mom”. This movie was a box office blockbuster in China earlier this year that attacked much attention. According to Chinese ticketing platform Maoyan, the movie grossed 5.41-billion-yuan, equivalent to $838 million at the time, making it the highest-grossing film directed by a woman.
Evergrande, the second-largest property developer in China, was initially established as a real estate developer in the late 1990s. Later on, however, it diversified its activities into new energy vehicles, life insurance, and spring water.
