China Evergrande Group breathed a sigh of relief after it reached an agreement with a group of strategic investors that agreed not to request buyback and are willing to continue to hold the developer’s equity, reported Caixin.
The development was a major step toward avoiding an imminent cash crunch.
The nation’s largest developer by assets has been in the spotlight recently after reports that it warned provincial officials of a liquidity squeeze if it failed to win approval for a backdoor listing on China’s A-share market by Jan. 31, 2021, as part of an agreement with the strategic investors.
Evergrande raised RMB 130 billion ($19 billion) from strategic investors including Suning Appliance Group and Citic Group. As part of the investment contract, Evergrande agreed to buy back the investors’ stakes at the original price if it didn’t secure regulatory approval for its backdoor listing early next year.
The Hong Kong-listed company tried to inject almost all of the property assets held by its unit Hengda Real Estate Group into the Shenzhen-listed Shenzhen Special Economic Zone Real Estate & Properties Group. But the listing plan has yet to obtain regulatory approval after nearly four years.