A unit of China Evergrande Group, the most indebted property developer in mainland China, has agreed to sell its stake in a project in Shantou, southern Guangdong province, continuing to pare down assets as it awaits the fate of its debt restructuring proposal.
The subsidiary, Hengda Real Estate Group Yuedong, will sell its entire 65 per cent stake in Shantou Hengmeng Property Development for 137.6 million yuan (US$19.4 million), according to a filing to the Hong Kong stock exchange on Thursday evening.
“The disposal serves to revitalise the group’s projects, promote the resumption of work and construction of existing projects, and safeguard the legitimate rights and interests of project investors, creditors and homebuyers,” Evergrande said in the filing.
Last month, a Hong Kong court granted Evergrande another reprieve, adjourning a hearing until January 29 and giving the company more time to restructure its debts. This was the seventh time the petition had been adjourned.
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China real estate woes: Evergrande files for bankruptcy protection in New York
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As part of the transaction, part of the debt amounting to 376 million yuan owed by Hengda and related parties to Shantou Hengmeng, will be waived.
Shantou Hengmeng is developing a 445.4 acre project in Shantou, a prefecture-level city on Guangdong’s eastern coast.
The sale of the Shantou Jinbi Bay project in the Haojiang district of the city commenced in August 2017. Some 478,800 square metres of the development have been sold, with 1,145 units subject to guaranteed delivery.
The buyer, Shantou Hengyao Property Development, “will fully promote the resumption of work and construction of the project to ensure the realisation of the goals of ‘ensuring the delivery of properties, protecting people’s livelihood, and ensuring stability’,” the statement said.
Evergrande expects to record a gain of about 304 million yuan from the disposal.
