(Yicai Global) Feb. 19 -- Shares of China Fortune Land Development slumped after the troubled Chinese property developer said that its controlling shareholder will sell a 2 percent stake in it over the next seven months due to equity pledging.

CFLD's stock price [SHE:600340] tumbled as much as 10 percent to CNY8.51 (USD1.30), the lowest since the fourth quarter of 2014. The shares resumed trading today after a more than three-week suspension due to a terminated asset acquisition plan.

CFLD Holdings has been negotiating with relevant financial institutions to solve the issue as soon as possible but the price, timing, and feasibility of the passive sale are uncertain, the Beijing-based property developer said in a statement yesterday. The planned sale should take place by September.

The company also said that it will not be buying a 33.3 percent stake in Tianjin-based Hanyuyao Graphene Energy Storage Material and Technology as the pair failed to agree on a price amid the buyer's changing debt situation which calls for more regulatory oversight.

CFLD is drowning in debt. The firm has been negotiating with its creditors after failing to repay CNY5.3 billion (USD816.9 million) in loans due to a cash crunch, the company said in an exchange filing on Feb. 1.

At a meeting on the same day, Chairman Wang Wenxue blamed the firm's debt issues on the pandemic, the company's reckless expansion, and its misjudged assessment of the state of real estate markets around Beijing.

The controlling shareholder owned 1.4 billion units or a 36 percent stake as of yesterday. It had pledged 610 million shares or over 43 percent of its total. That equaled almost 16 percent of the real estate developer's outstanding stock.

As of Jan. 31, CFLD's capital balance stood at CNY23.6 billion, but almost 97 percent of that was tied to deposits that cannot be quickly released to be allocated elsewhere.

The developer's short-term debts due within a year totaled CNY94 billion as of Sept. 30, 2020, up almost 56 percent from a year earlier. Its longer-term debts jumped by nearly 34 percent to CNY65.2 billion. It had CNY52.6 billion in bonds payable.

Editor: Emmi Laine, Xiao Yi