(Yicai Global) July 4 -- Cash-strapped car dealer Pangda Automobile Trade plans to offload a 5 percent stake as part of efforts to help the firm alleviate debt pressure and gain access to new credit financing.
Michael Yao, the founder of 58.Com, often described as China's Craigslist, will buy the stake, the Tangshan-based car trader said in a statement. The deal is valued at some CNY777 million (USD116 million) based on yesterday closing share price of CNY1.94 and its total capital stock of 6.7 billion shares.
Pangda controlling shareholder Pang Qinghua will use all proceeds from the deal as a financing margin to help the firm apply for credit. The enterprise has been struggled since listing in 2011 due to rapid expansion. At the same time, the company's asset-liability ratio has remained at around 80 percent for the past five years, much higher than those of its listed peers.
In order to alleviate the financial pressure, Pangda has reduced the scale of its business and closed a number of outlets in recent years. The firm announced plans in May to sell off five Mercedes-Benz dealerships to China Grand Auto for a pre-tax profit of CNY616 million, as well as issue corporate bonds in overseas markets to raise USD300 million.
Editor: William Clegg