Developer China Aoyuan posts note saying it is in talks to sell stake in property services unit as liquidity crisis rumbles on
- The Guangzhou-based company posted a statement on its official website saying it wants to sell a 29.9 per cent stake in Aoyuan Healthy Life Group
- China Aoyuan Group has been struggling after it officially defaulted on US$1.08 billion of senior notes in January this year
Embattled developer China Aoyuan Group has announced plans to put its stake in a listed subsidiary up for sale, as indebted Chinese developers struggle to raise cash amid rising debts and a prolonged market downturn.
The Guangzhou-based company posted a statement on Monday on its official website, saying that it intends to sell a 29.9 per cent stake in Hong Kong-listed property services unit Aoyuan Healthy Life Group by December 19. However, neither company has posted a filing with the Hong Kong stock exchange yet.
Bidders are expected to pay a preliminary deposit of HK$5 million (US$643,000) for the stake and a further amount equal to 20 per cent of the purchase price, according to the statement, but a target price for the whole stake was not disclosed. Aoyuan Healthy Life is an investment holding company mainly engaged in property management services and commercial operation services.
China Aoyuan Group has been struggling after it officially defaulted on US$1.08 billion of senior notes in January this year. The company, along with dozens of other Hong Kong-listed companies including Kaisa Group Holdings and Sunac China Holdings, saw their shares suspended in April after missing a deadline to file financial figures.
As of July, eight property companies including Aoyuan Group were removed from the Hang Seng Composite Index. As of the share suspension, the market value of Aoyuan Healthy Life was HK$1.35 billion, giving the stake an estimated value of about HK$400 million.
This is not the first time that China Aoyuan has tried to offload parts of the business. It was in preliminary discussions with several independent third parties regarding the possible disposal of certain divisions in Aoyuan Healthy Life, according to a statement in November 2021.
However, Infini Capital – the second-largest shareholder in Aoyuan Healthy Life at the time – said it would rather see the entire company sold instead of being stripped of its “jewels”, according to a statement by Infini at the time.