By Gina Lee

Investing.com – China Evergrande Group (HK:) has agreed to in Shengjing Bank Co Ltd (HK:) to the local Shenyang government for CNY10 billion ($1.54 billion).

The developer’s Hong Kong shares jumped 9.36% to HK$2.92 ($0.38) by 1:24 AM ET (5:24 AM GMT), after soaring over 10% earlier in the session. A statement sent to Hong Kong Stock Exchange stated that it would sell approximately 1.75 million domestic shares of Shengjing Bank to Shenyang Shengjing Finance Investment Group Co., for CNY5.7 each. 

Shengjing Bank closed at HK$7 Tuesday.

China Evergrande’s dollar bond due 2022 was indicated down a touch at 25.3 cents on the dollar while its 2025 note is unchanged at 23.5 cents, according to Bloomberg.

After the transaction is completed, China Evergrande’s Shengjing share will fall to 14.57%. The company had sold an earlier stake in Shengjing that brought it CNY1billion in August 2021.

China Evergrande chairman Hui Ka Yan has been under increasing pressure to spin off and sell assets to pay down the company’s massive debt. With a 36% original stake in Shengjing Bank valued around $2.8 million, it was one its most valuable assets.

However, the asset’s value has diminished recently as regulatory oversight on dealings such as preferential lending and bond purchases between banks and their largest shareholders were tightened. China Evergrande’s debt problems will not be helped by the sale. Following the late payment of a weekly bond interest payment, the company will have to make a $47.5m coupon payment on Wednesday.