(Yicai Global) June 27 -- Humanwell Healthcare Group has disclosed nearly three months late that the struggling Chinese analgesics maker has spent CNY1.5 billion (USD224 million), almost half its available cash, on properties to help out a company connected to its parent firm.

Humanwell purchased over 140,000 square meters of real estate from former unit Kemeilide Biopharmaceutical in March for CNY1.6 billion (USD239 million), it said on June 21 in response to queries from regulators. The company used CNY1.5 billion of internal funds to pay 85 percent of the contract amount within 10 days of signing the agreement.

No announcement of the intention to purchase was made before the transaction, and no mention of the deal was made in public until authorities started to make enquiries earlier this month.

Humanwell sold Kemeilide in August 2019 to a firm that has joint investments with Humanwell’s owner Dangdai Science and Technology Industries Group. Dangdai is in a liquidity crisis and defaulted on debt in April.

Yet the drugmaker is not in a position to help out. Humanwell only had assets of CNY3.5 billion (USD523.6 million) as of March and has CNY9 billion (USD1.3 billion) of debts to be repaid this year.

The properties will be used as Humanwell’s Hubei province pharmaceutical headquarters, a biomedical innovation center and drug e-commerce base, it said. However, the apartments, most of which have already been sold, are still under construction. They should be delivered by next October but there is a risk that they will not be delivered on time, it added.

Humanwell’s share price [SHA:600079] was trading down 1.04 percent at CNY16.10 (USD2.40) as of 1:30 p.m. China time today. In the past three trading days, the stock has lost over 5 percent of its value.

Editor: Kim Taylor