Securities trading and money lending company China Strategic Holdings Ltd said on Tuesday it planned to sell up to a 1.37per cent stake in a unit of indebted developer China Evergrande Group - and could do so at a significant discount.
China Strategic said in a filing to the Hong Kong stock exchange it would ask shareholders at an extraordinary general meeting to allow directors to dispose of up to 133.6 million shares in China Evergrande New Energy Vehicle Group.
The aspiring electric vehicle maker has a market capitalisaion of HKUS$28.33 billion (US$3.64 billion), according to Refinitiv Eikon data. That indicates a current market value of HKUS$388 million for a 1.37per cent stake.
To make any disposals more attractive, however, China Strategic said it would be willing to sell at a 20per cent discount to the five-day average closing price of Evergrande Vehicle shares. For the five days prior to Tuesday, that works out at around HKUS$2.76 (US$0.35) per share, it added.
Evergrande Vehicle's shares are currently at HKUS$2.90.
The stock is down more than 90per cent so far this year as concerns mount across global markets that its parent's US$305 billion in debt could trigger widespread losses in China's financial system in the event of a collapse.
"The company acquired the Evergrande Vehicle shares for investment purpose," China Strategic said in the filing.
"Having regard to the recent significant price fluctuations of the Evergrande Vehicle Shares, the board decided to restructure its investment portfolio and to solidify the financial and cash position of the group," it added.
(US$1 = 7.7875 Hong Kong dollars)
(Reporting by Tom Daly; Editing by Peter Graff)