Chinese developer Shimao plans to use equity to pay for onshore bonds By Reuters

© Reuters. FILE PHOTO: A man walks past a wall bearing the Shimao Group logo, with residential buildings and the Pudong financial district in the background, in Shanghai, China January 1, 2013. REUTERS / Stringer

HONG KONG (Reuters) – The flagship unit of Chinese developer Shimao Group has said it plans to use its own capital to make onshore bond payments due over the next three months, and is in talks to sell its commercial and hotel assets.

Shanghai Shimao Co also said that it would be difficult to meet its annual sales target of 38 billion yuan ($ 5.96 billion), as sales in the first 11 months were 28.2 billion. yuan.

The firm released comments made to investors in a filing Monday.

Shimao saw a sharp drop in its stocks and debt this month, sparked by concerns over a sale of assets and canceled apartment deals, as well as downgrades by rating agencies over credit risks. increased funding.

Shanghai Shimao also caused other concerns when it earlier announced that it had sold its property management business to its sister company Shimao Services for 1.7 billion yuan ($ 267 million), at an estimate by some senior analysts. to the market average.

The company said in Monday’s filing that the proceeds were for the development and operation of a shopping complex, not debt repayment.

Separately, Shimao Services – the group’s property management arm – said in a filing on Friday that it was operating steadily and would not make any divestments or acquisitions of major assets with the parent company in the next six months. .

Shares of Shimao Group and Shimao Services, both listed in Hong Kong, rose more than 2% on Tuesday. Shanghai Shimao lost 2%.

The Shimao Group told investors in November that its sales this year would be around 290 billion yuan due to a national credit crunch, and that it would consider selling commercial and hotel assets if prices were right.

($ 1 = 6.3721 renminbi)

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