(Yicai Global) July 31 -- Vanke will spend CNY2.4 billion (USD340 million) to become troubled Tahoe Group's second-largest shareholder, helping its fellow real estate developer stay afloat.
Vanke will buy nearly 20 percent of Tahoe, paying CNY4.9 (70 US cents) per share, the Fuzhou-based target firm said in a statement today. Tahoe Investment’s stake will drop to 29 percent.
At the end of last year, Tahoe had CNY23.6 billion (USD3.4 billion) in outstanding debts and CNY640 million (USD91.5 million) in late fees. But it has assets. Its land reserves amount to 13 square kilometers with a combined construction area of nearly 33 sq. km, covering key regions such as Beijing-Tianjin-Hebei and the Yangtze River Delta.
But there are conditions to the deal. Tahoe must formulate a debt restructuring plan and reach an agreement with its creditors. Shenzhen-based Vanke has other requirements too and its not certain that Tahoe can fulfill them, it added.
The investment would help Tahoe optimize its equity structure, promote debt restructuring, and maintain normal operations, the firm said.
Tahoe's net profit fell 82 percent to CNY466 million (USD66.7 million) last year from 2018. Revenue slid 24 percent to CNY23.6 billion. In the first half of this year, it could report a loss of between CNY1.5 billion and CNY1.9 billion (up to USD272.2 million) compared with a CNY1.6 billion net profit a year ago.
Tahoe's stock price [SHE:000732] slid almost 0.7 percent today to close at CNY5.94, while Vanke [SHE:000002] was little changed at CNY26.84 (USD3.90). The benchmark Shenzhen Component Index gained 1.3 percent.
Editor: Emmi Laine