Hopson Development to acquire Evergrande’s property management unit

The property developer Hopson Development Holding to acquire about 51 percent of the indebted Evergrande group’s property management unit, and the deal could be valued at more than 40 billion HKD ($5.14 billion) according to the reports.

Trading in Hopson’s shares also was suspended Monday in Hong Kong, “pending the release of announcement(s) in relation to a major transaction of the company under which the company agreed to acquire the shares of a company… listed on the stock exchange,” it said in a filing.

As Evergrande struggles to avoid defaulting on billions of dollars of debt. The company owes billions to banks, customers and contractors are facing a cash crunch. Its situation worsened after the government tightened limits on corporate debt levels.

As of June 30, Evergrande’s total liabilities had swelled to 1.97 trillion yuan ($305 billion) on the back of 2.38 trillion yuan in total assets, per its interim financial disclosure at the end of August. Mirroring its indebtedness, the company’s interest-bearing debts hit 571.7 billion yuan as of the end of June, among which debts due within a year stood at 240 billion yuan.

Evergrande’s failure to pay overdue bills and its default on some wealth management products sold by the company, apparently fanned woes over its debt woes.

The group chairman of Evergrande, Xu Jiayin said on a late-night conference in September

that the company will try to guarantee the quality and smooth delivery of the buildings of Evergrande’s projects scattered in many Chinese cities, saying it is the company’s obligation and responsibility.

The company has been actively exploring options with potential investors on the sales of part of its stakes in China Evergrande New Energy Vehicle Group Ltd, as well as purchasers for its office building in Hong Kong. It is uncertain whether the group will be able to execute those sales.