(Yicai Global) Dec. 21 -- Troubled Chinese developer China Evergrande Group has reduced its holdings in its property management subsidiary through the forced sale of shares held by a third party in order to meet debt obligations. However it remains the majority shareholder.

Evergrande sold 700 million shares in Evergrande Property Services Group on Dec. 14 through a company owned by Chairman Hui Ka-yan, called Xin Xin, the Hong Kong Stock Exchange said. The move dilutes Evergrande’s equity to 51.71 percent from 58.18 percent.

The sale was due to related parties taking steps to force the sale of pledged shares or to enforce rights to shares held as guarantees against the developer, it said.

No pricing was given for the share sale, but the stock was worth HKD2.30 (USD0.29) apiece before the property services firm was suspended from trading on March 21 due to an ongoing probe into a CNY13.4 billion (USD1.9 billion) security deposit it holds and for failing to submit its 2021 earnings report on time. That would place the value of the deal at around HKD1.6 billion (USD205.3 million).

This is not the first time that Evergrande has been forced to cut its stake in Evergrande Property. On Dec. 20 last year, when the property management subsidiary’s stock was still trading, the Shenzhen-based company sold 300 million shares in the same way, reducing its shareholding ratio to 58.18 percent from 60.96 percent.

Evergrande Property was once one of Evergrande’s biggest earners. But its share price has been on the decline since last year due to the parent firm’s debt crisis.

Evergrande has been trying to sell it to raise much needed cash. Last October, developer Hopson Development Holdings agreed to buy a 50.1 percent stake, but the deal fell through as the two parties could not agree on payment conditions. In a debt restructuring plan issued in July, Evergrande placed Evergrande Property on a list of assets to be sold.

In order to start trading again, the probe into Evergrande Property would need to be completed and the company would need to make sure that all its earnings reports are up to date.

The independent investigation into the CNY13.4 billion of pledges is almost complete, Evergrande Property said yesterday, adding that the review of its annual financial report for 2021 and semi-annual report for this year is still ongoing.

Editor: Kim Taylor