Dow Jones Newswires: China Evergrande to sell stake in film production company for $273 million
China Evergrande Group
is planning to sell its entire stake in a Hong Kong-listed film and television production company for 2.13 billion Hong Kong dollars ($273.5 million), the latest move by debt-strapped conglomerate to generate cash.
The Shenzhen-based company is selling its entire 18% stake in HengTen Networks Group Ltd.
for HK$1.28 per shares, which is a 24.3% discount to the last traded price, Evergrande Group said Thursday.
The company will incur a loss of about HK$8.5 billion from the transaction, calculated based on the difference between the consideration and the book value for the sale shares as at end-June.
Evergrande Group had borrowed heavily and expanded aggressively for years, buying hundreds of parcels of land across China, building giant high-rise residential developments and selling many apartments years before they were completed. It also branched out into theme parks, healthcare services and electric vehicles.
Over the summer, cash flow problems mounted for the company and its bond prices plunged to distressed levels, preventing the company from turning to the capital markets to raise more funds.
The spree left the Chinese property giant with the equivalent of roughly $300 billion in liabilities at the end of June, including about $20 billion in outstanding dollar bonds. Payments on several bonds are coming due over the next week.
Proceeds from the divestment will be used for general working capital of the company, Evergrande Group said.