China Evergrande unit to sell entire stake in asset to cut debt

(Reuters) -China Evergrande said on Thursday one of its units had entered a deal to sell its entire stake in Shantou Hengmeng Property Development for 137.6 million yuan ($19.20 million).

Hengda Real Estate Group Yuedong, a unit of the property giant, holds a 65% stake in Shantou Hengmeng, with the rest being held by Redleaf Trading, its Australia-based joint venture partner.

Evergrande expects to gain about 304 million yuan from the sale, which will be used to pay off its debt worth 376 million yuan, owed to Shantou Hengyao Property Development.

"The Disposal serves to revitalize the group’s projects, promote the resumption of work and construction of existing projects, and safeguard the legitimate rights and interests of project investors, creditors and home buyers," Evergrande said in a release.

The company, which defaulted on its offshore debt in late 2021, could face a liquidation petition from its key offshore bondholder group, with a hearing scheduled for Monday, according to a Reuters report.

($1 = 7.1675 Chinese yuan renminbi)

(Reporting by Poonam Behura in Bengaluru; Editing by Pooja Desai)