Market concern has mounted in recent weeks that Evergrande - whose borrowings totalled 835.5 billion yuan ($123.93 billion) at end-June - was headed for a cash crunch if it could not get Chinese approval for the listing plan that has languished for four years.
But some investors in the listing plan have agreed not to demand repayment, the company said in a filing to the Hong Kong bourse on Sunday.
"The move in our view should have minimum impact on its operation as they have already settled with most strategic investors to convert their investment into equity," Raymond Cheng, head of Hong Kong/China research at CGS-CIMB Securities Ltd, said in a note.
"We think market expectation about the completion of A-share restructuring is very low," Cheng said. "This, however, should hurt its reputation and creditability somewhat."
The Hong Kong shares of China's second-largest property developer slid 2.3% in early trading before rebounding 2.5% to HK$16.90, their highest since Oct. 12. That outpaced a 1.3% gain in the benchmark Hang Seng.
Stock of Shenzhen Special Economic Zone Real Estate & Properties Group climbed as much as 6.4% after falling 7.3% in early morning trading. The shares had been suspended since September 2016.
"The termination after four years does not come as a surprise," Chuanyi Zhou, a credit analyst at Lucror Analytics, said in a research note.
"The agreements with the majority of strategic investors alleviate liquidity pressure that would have arisen if they were to exercise their repurchase options in January 2021," Zhou said. "We remain concerned, however, that there may be a commitment to a guaranteed return for these strategic investors."
Evergrande has been scrambling to raise cash as China's government tackles what it considers excessive borrowing in the real estate development sector with new debt-ratio caps. It recently raised $555 million in a secondary share sale.
In September, Reuters reported that Evergrande had sent a letter to the Guangdong provincial government asking for accelerated approval to float subsidiary Hengda Real Estate via the reverse merger in Shenzhen.
It warned of risk to China's financial stability if Evergrande failed to meet a January listing deadline, which would have triggered some 144 billion yuan ($21.79 billion) in payments to backers.
But the company said in the filing that some creditors had agreed not to press for repayment.
Of the 130 billion yuan of equity interests held by strategic investors, investors holding 86.3 billion yuan equity interests have agreed not to require the company to repurchase their equity interests and will continue to hold their interests in Hengda Real Estate.
Investors holding 35.7 billion yuan of equity interests will enter into agreements soon, and Evergrande is still in talks with investors holding 5 billion yuan, the Hong Kong-listed firm said in the stock exchange filing.
Evergrande said it has paid the principal of strategic investors holding 3 billion yuan equity interests in Hengda Real Estate, and will repurchase their equity interests.
The company said it will make a further statement on details of the agreements.
"The termination of the deal means the company will need to consider other channels in a bid to lower their leverage," said Zhou from Lucror.
Possible avenues include the listing of Evergrande's property management arm in Hong Kong, the introduction of strategic investors to Evergrande Vehicle and a bid for a dual listing on the Shanghai Stock Exchange's Sci-Tech Board as well as continuous price cutting to accelerate contracted sales, Zhou added.
(Reporting by Donny Kwok; Editing by Kim Coghill and Gerry Doyle)