Evergrande £2.6bn property unit deal collapses

A deal to sell a $2.6bn stake in the world's most indebted property firm to a rival company has fallen through.

Chinese property giant Evergrande Group suspended its shares on 4 October ahead of "an announcement containing inside information about a major transaction".

It was reported that real estate firm Hopson Development was set to buy a 51% stake in its property services unit.

Both companies halted trading for more than two weeks, but will now resume on Thursday after the agreement collapsed.

The crisis at Evergrande has triggered fears that its potential collapse could send shockwaves through global markets.

Investors have concerns about its more than $300bn (£222bn) of debt.

The firm's shares have fallen by almost 80% since the start of this year. The company's total liabilities are equal to around 2% of China's gross domestic product.

The parties said in separate filings to the Hong Kong Stock Exchange that they were unable to agree on the terms of the deal.

Hopson Development said that Evergrande told it the deal had been terminated on 13 October.

Hopson added: "The company is exploring the options available to it for the protection of its legitimate interests in relation to the agreement."

In a stock market statement, Evergrande Group chairman and founder Hui Ka Yan said the company would "use its best effort to negotiate for the renewal or extension of its borrowings or other alternative arrangements with its creditors", following the deal's collapse.

"There is no guarantee that the group will be able to meet its financial obligations under the relevant financing documents and other contracts," he added.

"If the group is unable to meet its guarantee obligation or to repay any debt when due or agree with its creditors on renewal or extension of its borrowings or alternative arrangements, it would have a material adverse effect on the group's business, prospects, financial condition and results of operations."

In recent weeks Evergrande has struggled to make payments to investors in its bonds and wealth management products.

The indebted property giant reportedly missed interest payments to overseas investors twice in September.

The company has been taking steps to raise money owed to customers, investors and suppliers. It has previously said it was selling a $1.5bn stake it owned in a commercial bank.