Chain Evergrande Group to divest majority of its equity interest in Shengjing Bank Co. (2066 HK) under mounting pressure to meet the company’s massive debt obligation.
The company announced to sell its stake worth about 9.9 billion yuan ($1.5 billion) which is 1.75 billion shares reducing Evergrande stake from 34.5% to 14.75%.
Shengjing Bank remained as one of the main lenders for Evergrande and proceeds from the divestment transaction would be used to settle financial liabilities due with the bank. The holding became less favorable as regulatory scrutiny on transactions such as preferential lending and bond purchases between the bank and its largest shareholders increased in recent times.
The move implies the debt mounted real estate mughal will not use the proceed to meet interest liabilities worth $47.5 on its dollar denominated due on Wednesday.
Evergrande shares on the Hong Kong exchange rose as much as 10% on Wednesday morning.