(Yicai Global) Nov. 1 -- Shares in First Service Holding soared 57.66 percent today after the chairman and majority stakeholder of its struggling parent company Modern Land said he was selling part of his stake in the property management unit to help repay debts due.

Zhang Lei and persons acting in concert with him are selling a 32 percent stake in First Service to the property services arm of real estate developer Sunac China at a price of CNY2.15 (USD0.34) per share, the property services unit said today.

This is just a tad under today’s closing price of HKD2.16 (USD0.28) apiece and brings the value of the deal to CNY460 million (USD72 million). After the transaction, Zhang’s stake will drop to 30 percent from 51.4 percent, making Sunac Service the largest shareholder.

Sunac Service will issue a mandatory tender offer for all outstanding shares to shareholders, according to the trading rules of the Hong Kong stock exchange. If the offer is accepted and once completed, First Service will become Sunac Service’s wholly-owned subsidiary and delist from the bourse.

Modern Land became the ninth Chinese real estate developer to miss a debt payment this year when it defaulted last month on the principal and interest of a USD250 million bond due to “unexpected liquidity issues” caused by adverse factors such as the macroeconomic, realty and pandemic environments, the Beijing-based small developer said.

Modern Land has taken on more debt in recent years to expand, with high coupon rates on its bonds eating into earnings. In September alone, contracted sales fell 23 percent from a year ago to CNY3.6 billion (USD558.4 million), while the contracted sales area shrank 20 percent to 367,300 square meters.

First Service’s managed floor area was 73 million square meters as of the end of the first half, over two thirds of which are in major cities such as Beijing, Xi’an and Changsha.

Editors: Dou Shicong, Kim Taylor