China Evergrande sells Qingdao development to Sunac for 3.66 billion yuan
Sale of Qingdao Shidai City comes after Evergrande spent 12 billion yuan to lift its China Vanke stake to 14 per cent
Hong Kong-listed mainland developer China Evergrande Group agreed to sell its Qingdao project to Sunac Group for 3.66 billion yuan on Wednesday morning, just a day after announcing it has spent 12 billion yuan to increase its stake in rival China Vanke to 14 per cent.
Evergrande’s share price rose 0.56 per cent to HK$5.38 at 10:30am after the announcement was made before the market opened on Wednesday.
Shenzhen-listed Calxon Group, an indirect subsidiary 52.78 per cent owned by Evergrande, had agreed to sell its entire stake in Qingdao Calxon Real Estate Development that is principally engaged in the development of the Qingdao Shidai City Project, Evergrande said in a statement to the Hong Kong stock exchange this morning.
The project, located in Licang District, Qingdao city, has a total site area of 1.06 million square metres and a total gross floor area of 1.79 million sq metres for residential and commercial purposes.
Sunac will pay for the development in two instalments, with 1.83 billion yuan to be paid within one month and the rest within the next 12 months. The sale was conducted through a public auction at the Zhejiang Asset Exchange.
Qingdao Calxon Real Estate owed Evergrande a loan of 2.35 billion yuan, for which Sunac will act as guarantor for it to be repaid within a year. Sunac will also act as guarantor for third-party loans amounting to 1.85 billion yuan.
The disposal came after China Evergrande Group splashed out more than 12 billion yuan to acquire China Vanke’s A-shares on Shenzhen Stock Exchange over the last few trading days, according to a stock exchange filing on Tuesday.
The shares purchase has allowed Evergrande to lift its stake in Vanke, China’s biggest homebuilder, to 14 per cent as the country’s highest profile boardroom tussle continues.
Evergrande chairman Hui Ka-yan said in Wednesday’s announcement that the disposal “is in accordance with the strategic development plan of the Calxon Group with regard to the residential property business in which the disposal will accelerate the turnover of inventory and will benefit its long term development.”
He continued: “The proceeds from the disposal upon completion will enhance the capital reserve and positively contribute to the profits and cash flows of the Calxon Group.”
Hui said the disposal was conducted through a public bidding process conducted by the Zhejian Asset Exchange, so the terms “are on normal commercial terms, fair and reasonable and in the interests of the company and its shareholders as a whole.”
The deal is expected to yield an unaudited pre-tax gain of approximately 2.79 billion yuan. The proceeds from the disposal will become general working capital of Calxon Group.