Beijing: China Evergrande Group has agreed to sell stakes in its internet unit for a total of HK$3.25 billion ($418 million) to ease funding pressure.
The developer will sell 7 per cent of Hong Kong-listed HengTen Networks Group at HK$3.20 apiece to a unit of Tencent Holdings for HK$2.07 billion, according to an exchange filing on Sunday. Evergrande also agreed to sell a 4 per cent stake to an unidentified buyer for HK$1.18 billion.
Evergrande has resorted to offloading assets and spinoffs, as it tries to reassure investors about its financial heath and meet China's so-called "Three Red Lines" requirements that curb developer debt ratios. So far it's struggled with its stocks and bonds sinking last month. The world's most indebted developer was downgraded by S&P Global Ratings and Fitch Ratings in recent days due to its weakening access to funds and liquidity position.
Prior to the transaction, the developer held a 37.55 per cent stake in the company, while Tencent held 16.9 per cent, according to disclosure of interests to the exchange. Evergrande's stake will go down to 26.55 per cent and Tencent's holdings will increase to 23.9 per cent after the sale, the filing showed.
HengTen climbed 22 per cent in Hong Kong on Wednesday, halting three days of declines. The stock was later suspended. Evergrande dropped 28 per cent last week to close at HK$5.26 on Friday.
HengTen's shares are expected to resume trading on August 2, the filing showed. Evergrande has agreed to provide a 5-year loan of HK$2.07 billion to HengTen to support its business development, the company added in the filing.