China developer Greentown agrees to sell two subsidiaries for 3.47bn yuan
Hangzhou-based developer Greentown China Holdings, the country’s ninth largest developer in terms of sales, has agreed to sell two wholly owned subsidiaries to China Investment for a combined 3.47 billion yuan (US$503 million), according to a Hong Kong stock exchange filing on Sunday.
Greentown will sell its entire stake in Greentown Yinshi and Hangzhou Litao for 1.78 billion yuan and 1.69 billion yuan respectively. Both companies hold plots of land located in Chaoyang District in Beijing with a combined area of 16,205 sq metres. The land is zoned to be used for commercial properties and serviced apartment purposes.
It is expected Greentown will record an estimated gain of about 1.26 billion yuan before taxation from the Yinshi deal and a gain of 376 million before tax from the Litao disposal.
The two agreements are inter-conditional so that in the event the Yinshi disposal is terminated, the Litao disposal agreement will simultaneously be terminated.
The unaudited net asset value of Yinshi and Litao was about 33 million yuan and 1.02 billion yuan respectively.
“The group reviews its existing land bank and development projects from time to time and the disposals will allow the group to realise its investment gain in Greentown Yinshi and Hangzhou Litao,” Greentown said in the exchange filing.
The company said the deals would provide additional cash inflow and reallocate more financial resources for other property development projects, as well as provide general working capital for the group.
“The board is of the view that disposals will enhance the liquidity of the group and generate future benefits for the company and the shareholders as a whole,” it said.
The developer’s net profits rose 136 per cent to 1.9 billion yuan in 2016, compared to a 60 per cent decline in 2015, thanks to better gross margins.