By Serena Ng
SINGAPORE— China Evergrande Group called off plans to sell a majority stake in its property-management unit for the equivalent of $2.6 billion, a major setback in the real-estate giant’s attempts to ease its liquidity crunch.
The cash-strapped developer said Wednesday that it had planned to sell 50.1% of the profitable subsidiary, Evergrande Property Services Group Ltd. (HKG:HK:6666) , to a unit of rival developer Hopson Development Holdings Ltd
The agreement was struck on Oct. 1 and was to be completed by Oct. 12. It was terminated by Evergrande, which said in a regulatory filing that it “had reason to believe…that the purchaser had not met the prerequisite to make a general offer for shares in Evergrande Property Services.” The business is listed in Hong Kong, and securities regulations in the city require a buyer of 30% or more of a public company to make a takeover offer to all its shareholders.
Hopson, in a separate filing Wednesday, rebutted Evergrande’s version of events. It said it had been ready to buy the stake but the other parties to the deal had made unacceptable requests to change the terms. It said that included a demand that Hopson send all the funds directly to Evergrande, rather than first depositing the payment with the property management unit, as the agreement had stated.