Hong Kong-listed China Netcom Group Corp, the mainland's No2 fixed-line operator, will sell back its loss-making networks in Guangdong and Shanghai to its parent, China Netcom Group, for 6.5 billion yuan, the firm said yesterday.
China Netcom expects to record a 711 million yuan gain from the sale based on the networks' net asset value of 2.78 billion as of June last year.
As part of the deal, the parent, China Netcom Group, will assume three billion yuan of debt owed by the operations in Guangdong Province and Shanghai Municipality to independent third-party creditors.
The remaining 3.5 billion yuan will be paid in cash by the parent with the initial 1.05 billion yuan, 30 per cent of the total, paid on the first day immediately after the completion of the sale and 2.45 billion yuan within 30 days.
The deal would be completed before the end of next month and was subject to the approval of independent shareholders and relevant authorities, the company said.
Proceeds from the disposal of the networks will be used as general working capital.