China Fortune Land Development Co has agreed to sell equity interest and debt in four property units worth 12.4 billion yuan ($1.8 billion) to a unit of China Resources Land Ltd (CR Land), the companies said.
The deal comes as Chinese regulators encourage financially sound developers to acquire projects from debt-laden rivals to ease liquidity stress in a sector crucial to China’s economy.
The transaction is part of a debt restructuring plan unveiled in October as China Fortune Land seeks various ways to ease a liquidity shortage triggered by an adverse economic environment and the pandemic, the developer said in a statement.
Proceeds from the deal “will be used mainly to repay debts … and promote the implementation of the debt restructuring plan,” China Fortune Land said in a statement late on Wednesday.
China Resources Land said in a separate statement that the target projects are in the core areas of Wuhan and Nanjing cities, which have long-term potential for development, and are in line with the company’s investment strategy.
The deal may help China Resources Land expand market share, enhance competitiveness and generate investment returns, the company said, adding the purchase would be funded by internal resources or bank financing.
China has been facilitating bank lending as well as bond and equity financing to qualified developers in an effort to aid an industry teetering under mountains of debt and stagnant property sales.
Reuters