Shares in China Evergrande dropped sharply after the struggling property giant announced that it had abandoned plans to sell a majority stake in its property services subsidiary and that it could not guarantee that it could meet its debts.
Evergrande, which has debts of US$305bn, has missed several bond interest payments in the past couple of months and will go into default if it misses a repayment due on Monday.
There are fears that a collapse of Evergrande could trigger a domino effect that would lead to other property developers defaulting on their payments.
Evergrande said on Wednesday that it had failed to reach agreement for the sale of a 50.1% stake in its Evergrande Property Services arm to smaller rival Hopson Development Holdings for US$2.6bn.
Evergrande said Hopson had not met the “prerequisite to make a general offer”.
Meanwhile, Hopson said it had been prepared to complete the deal but had received a transaction termination notice from Evergrande on 13 October.
Last week, Chinese state-owned Yuexiu Property pulled out of a proposed US$1.7bn deal to buy Evergrande’s Hong Kong headquarters.
Evergrande's chairman and founder Hui Ka Yan said the group will try to secure extensions for its debts, but cautioned that "there is no guarantee that the group will be able to meet its financial obligations".
It was also reported on Thursday said Evergrande had secured a three-month extension to a US$260mln bond.
Evergrande shares closed nearly 13% lower in Hong Kong on Thursday.