BEIJING (AFP) – Shares in debt-laden Chinese property giant Evergrande rallied yesterday after a state firm official was appointed to its board, paving the way for a government rescue plan.
Evergrande, which has been teetering on the brink for months owing to its struggles in servicing a debt pile of more than USD300 billion, ended up nearly four per cent higher yesterday.
The rally came after a Sunday stock exchange filing showed the company has appointed Liang Senlin of China Cinda Asset Management – one of the country’s four biggest state asset managers – to its board.
The provincial government of Guangdong – where the firm is headquartered – is currently overseeing Evergrande’s debt restructuring process and appointing an official from a major state asset manager appears to have pleased investors.
State-owned firms are expected to take over the ailing property giant’s assets and the company set up a risk management committee last month, with senior officials from state entities to facilitate the process.
On Sunday, Evergrande said it has also appointed the head of its electric vehicle business Shawn Siu to the company’s board as it bets on this growing sector to help bail out its troubled real estate businesses.
The company has repeatedly said it will finish its projects and deliver them to buyers in a desperate bid to salvage its debts, despite having missed a payment of more than USD1.2 billion in December.
China’s property firms have struggled in the wake of Beijing’s drive to curb excessive debt in the real estate sector as well as address rampant consumer speculation.
Another struggling developer, Yuzhou Group, said it will default on two dollar bonds worth over USD100 million due this week, in a filing to the Hong Kong stock exchange yesterday.
Yuzhou has USD5.7 billion worth of dollar-denominated debt, according to data compiled by Bloomberg.
In recent days, stressed property companies Agile Group and Shimao Group have also announced sales of stakes in companies to state-owned enterprises.