(Reuters) – China Evergrande Group, the country’s most indebted property developer, said it would cancel a special dividend proposal, citing the current market environment, and the rights of shareholders and creditors.
The decision reversed a plan proposed only two weeks ago, and came after rating agency S&P’s downgrade on Monday.
Shares of Evergrande plunged another 13.4% on Tuesday to the lowest closing since March 6, 2017. The stock has lost 60% so far this year.
Worries over the developer’s financial health intensified after Evergrande admitted in June it did not pay some commercial paper on time, and news last week that a Chinese court froze a $20 million bank deposit held by the firm on the request of Guangfa Bank.
On Tuesday, Evergrande Chairman Hui Kan Yan said in a filing the board of directors has decided to cancel the proposal after a thorough discussion and taking into account the long-term development of the company’s various businesses.
Evergrande said in mid-July it would hold a board meeting on July 27 to discuss a special dividend plan, which was expected to give a boost to the share price.
S&P cut its ratings on China Evergrande by two notches to B- from B+ on Monday, with a negative outlook, citing weakening funding access that will hamper the company’s liquidity position and ability to reduce debt.
S&P added Evergrande’s access to funds may continue to deteriorate and a potentially significant margin erosion may further drag down its credit profile.
Two other rating agencies, Fitch and Moody’s, have downgraded Evergrande in the past few weeks.
(Reporting by Donny Kwok and Clare Jim; Editing by Himani Sarkar and Tomasz Janowski)
