(Yicai Global) Dec. 29 -- Shares of China Fortune Land Development rose after the developer said it plans to sell its properties in the south of the country to state-backed China Resources Land for a discounted price of CNY12.4 billion (USD1.8 billion).

China Fortune Land [SHA: 600340] closed up 2.4 percent at CNY2.58 (37 US cents) today, after earlier gaining by as much as 5.6 percent. The wider Shanghai market slid 0.4 percent.

China Resources Land will acquire the assets of two developers in Wuhan and Nanjing, as well as all the equity of a property management firm in Shenzhen, which were led by former China Resources Land Executive Director Wu Xiangdong after he joined China Fortune Land as chief executive, the latter company said late yesterday.

The three projects are valued at CNY19.9 billion, Beijing-based China Fortune Land said. After the sale, its only commercial real estate project will be Shenzhen-Harbin Financial Science and Technology City in Harbin, Heilongjiang province.

The proceeds will be mainly used to pay off debts of the company and its subsidiaries, China Fortune Land noted.

Impacted by factors such as the negative credit environment and the pandemic, China Fortune Land was one of the first Chinese property firms to tip into a liquidity crisis. It had failed to repay CNY60.2 billion of debt on time as of Nov. 30. Its debt restructuring totaled CNY126.6 billion (USD18.2 billion), CNY11.4 billion of which is the amount of debt interest reduction and penalty interest exemption.

The creditors holding 84 percent of the total principal amount of China Fortune Land’s overseas US dollar bonds, equal to nearly USD5 billion, signed an agreement enabling the holders of USD1.3 billion in principal to convert the debt into equity.

Editor: Futura Costaglione