(Yicai Global) Nov. 6 -- China's Hengkang Medical Group plans to sell its 70.3 percent stake in Australia's second-largest imaging diagnosis company PRP Diagnostic Imaging for just 6 percent of what it paid in order to trim down debt.

The Gansu-province based pharmaceuticals manufacturer plans to sell its majority stake in the loss-making unit to Australian mergers and acquisitions expert Andrew Donald Low for around AUD10 million (USD6.9 million), it said in a statement yesterday. Doctors and other specialists at PRP hold the remaining shares.

Hengkang took over the company, which offers 20 different services at 30 centers in New South Wales, less than two and a half years ago in June 2017, when it paid CNY1.7 billion (USD243 million). Its shares have plummeted to CNY2.51 (53 US cents) apiece since the acquisition, down from CNY12.

The deal will reduce net profit for the fourth quarter by CNY472 million (USD67.4 million) but reduce audited borrowings by CNY1.1 billion and save CNY14.5 million a year, the statement added.

Hengkang has managed to narrow its 2018 losses this year, but is still in the red and struggling with debt. It lost CNY108 million in the third quarter and CNY169 million over the first three, both finer losses than a year earlier, while operating income declined 2.5 percent to CNY886 million and 1.2 percent to CNY2.7 billion.

Hengkang's controller Que Wenbin, who holds near 42.5 percent of the company, had all his shares either frozen or suspended for freezing after eight domestic courts looked to settle the firm's debt woes, according to the company's third-quarter financial report published yesterday.

Editor: James Boynton