Evergrande secured an extension on a defaulted bond

China Evergrande Group has secured an extension on a defaulted bond, financial provider REDD reported on Thursday, offering rare respite to the developer a day after a deal to sell a $2.6 billion stake in its property services unit failed.

Evergrande has won a more than three-month extension to the maturity of a $260 million bond, issued by joint venture Jumbo Fortune Enterprises and guaranteed by Evergrande, beyond Oct. 3 after agreeing to provide extra collateral, REDD reported, citing holders of the bond.

A source familiar with the matter said that Evergrande Chairman Hui Ka Yan had agreed to pump in personal wealth into a Chinese residential project tied to the bond to ensure it gets completed, paving the way for bondholders to get their dues.

The bondholders agreed to the proposal to avoid a messy collapse of the developer or a drawn-out legal battle, the source told Reuters.

News of the extension came after Evergrande said on Wednesday it had scrapped a deal to sell a 50.1% stake in Evergrande Property Services Group Ltd to Hopson Development Holdings Ltd as the smaller rival had not met the "prerequisite to make a general offer".

Both sides traded blame for the deal failure, with Hopson saying it does not accept "there is any substance whatsoever" to Evergrande's termination of the sales agreement, and it is exploring options to protect its legitimate interests.

In additional comments made in a statement on Thursday, Hopson said all major banks were positive towards this purchase, and a third-party financial adviser had verified the company had the financial resources needed to acquire the 50.1% stake and for a general offer.

The deal is Evergrande's second to collapse amid its scramble to raise cash in recent weeks.

Two sources told Reuters last week the $1.7 billion sale of its Hong Kong headquarters had failed amid buyer worries over Evergrande's financial situation.

The setback also comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond, at which time, if it cannot pay, China's most indebted developer would be considered in default.

Evergrande, in an exchange filing on Wednesday, said the grace periods for the payment of the interest on its U.S. dollar-denominated bonds that had become due in September and October had not expired. It did not elaborate.