HONG KONG (Reuters) - Chinese logistics and commercial developer China South City Holdings Limited said it had agreed to sell a nearly 70% shareholding in a business that holds its projects in the central city of Xian to a state-owned shareholder for 5 billion yuan ($717 million).
The developer said in a filing it is expected to record a gain of HK$8 million ($1.03 million) from the sale, and the proceeds will be used by the business - China South City Xi'an - for working capital and repayment of 2.86 billion yuan of shareholders' loans it provided.
"The deal will be able to improve the liquidity of (China South City Xi'an)...and provide additional working capital to the group and reduce the gearing ratio of the group," China South City said in the filing on Sunday.
China South City also said the buyer represents related parties of a unit that is part of its major shareholder SZCDG, which is owned by the Shenzhen municipal government.
China South City Xi'an has property developments of completed gross floor area of 2.41 million square metres, and planned gross floor area of 760,000 square metres.
After the deal, the business will be held 69.35% by the buyer, and 30.65% by China South City.
The buyer has also been granted a Put Option which will allow it to sell all or part of the shares in the Xian business back to China South City in the future.