(Yicai Global) Dec. 13 -- CIFI Holdings Group, which said last month that it is pausing repayment of its offshore debt, will sell all its equity in the struggling Chinese developer's lucrative property management subsidiary to help meet its overseas debt obligations.

CIFII will sell its entire stake in CIFI Ever Sunshine Services, at 23.2 percent of total equity, the Shanghai-based developer said yesterday. The share sale is open to tender and potential bidders have been invited to preliminary discussion, but no deals have been signed yet.

Based on CIFI’s Ever Sunshine’s closing price of HKD5.5 (USD0.71) yesterday, the sale may generate HKD2.2 billion (USD283 million) for CIFI. But it would be a drop in the ocean as the firm had accumulated offshore debts of USD6.9 billion as of early November.

The firm, which has a USD300 million note due in January next year, is trying to boost liquidity through overseas asset disposal and other means to ensure there are enough funds to maintain normal operations, it said. The priority at the moment is to do everything possible to improve liquidity and honor overdue foreign debts. The group intends to settle with creditors and other stakeholders no later than the first quarter of next year, it said.

The sale would also be a huge loss to CIFI as CIFI Ever Sunshine is the developer’s biggest earner. The property management firm’s profit jumped 35.8 percent in the first half from a year ago to CNY437 million (USD62.6 million), according to its semi-annual financial report. And revenue soared 53.6 percent to CNY3.1 billion (USD450 million). The unit’s floor area under management topped 200 million square meters for the first time. And it had CNY3.8 billion in cash and cash equivalents as of June 30.

CIFI, on the other hand, has seen business plunge. Sales and financing conditions have become worse since September, and there has been a worse-than expected deterioration in the group’s cash flow, it said in November. As a result, the developer said it would suspend repayments of its foreign debt’s principal and interest while it works out a complete solution.

CIFI has been relying on its own cash resources to pay off debt and so far this year has repaid about USD1.5 billion worth of principal and interest to offshore creditors. But it has only been able to raise USD500 million in new overseas financing this year, Yicai Global has learned.

Editors: Tang Shihua, Kim Taylor