Policy makers lifted restrictions on local share sales in China, setting the stage for the first test of investor demand.
The company plans to sell up to 30% of its share capital to no more than 35 investors. A private share sale is planned by the smaller company.
At a time when real estate shares are just starting to rebound from record lows, the two developers will give the first indication of demand from investors. China will allow listed builders to sell local shares for debt repayment and acquisitions after this week's announcement.
According to analysts Daniel Fan and Adrian, the cash pool of the company could be boosted by more than 3 billion yuan by the sale of its key unit.
The company will be able to come up with a debt plan if part of the proceeds are used to negotiate a debt extension.
The money will be used for housing projects and debt repayment.
Cash- strapped Shimao has seen its sales tank as a result of a cash crunch brought on by policy measures. In the last few months it has requested extensions to repay loans, asset-backed securities and trusts.
According to China Real Estate Information Corp., it fell out of the top 10 by sales.
The bonds surged before being halted. The bonds gained 1.6 cents on the dollar to 7.56 cents, the largest one-day rally in more than three months.
The shares of the two cities surged by 10% a day.
Real estate prices in China fell for the 14th month in a row in October, but the country has relaxed its stance against developers. The government has offered some developers the chance to issue guaranteed bonds and has promised to finance at least 1.28 trillion yuan for builders through its largest banks.
With assistance from Chi Yui Siu.
All Rights Reserved © 2024
