(Yicai Global) Dec. 18 -- A Shougang Group unit will sell equity stakes and creditors' rights relating to Eastern Steel Sdn Bhd, a sign that Shougang will soon exit its first overseas steel project, the Beijing News reported, citing China Beijing Equity Exchange information.

Dongfang Steel Investment Co., whose parent is Shougang International (Singapore) Pte Ltd., will sell a 40 percent stake and CNY834 million (USD126 million) of creditors' rights in the Terengganu-based group for CNY860 million. Shougang International (Singapore) is a subsidiary of Shougang Group.

Shougang International (Singapore) previously signed a contract with Eastern Steel for a steel mill project in Malaysia. As the general contractor of its first phase, Shougang International (Singapore) acquired a 40 percent stake in Eastern Steel, making the steel mill Shougang's first manufacturing facility overseas, per the Council of China's Foreign Trade.

Eastern Steel's main assets are construction works in progress. Eastern Steel started trial production in December 2014 and has halted production in October 2015. Its output during the trial production period was about 300,000 tons. Eastern Steel recorded no operating income and CNY236.5 million in net losses last year. The company was insolvent as of the end of October this year. It had assets worth CNY1.09 billion and liabilities of CNY1.38 billion.

Eastern Steel's management expects the company to resume production on Feb. 1 next year, produce 578,800 tons of steel next year and have an annual output of 665,000 tons in the coming years.

Shougang has made several investments abroad in recent years. Shougang International (Singapore) said it has helped Shougang develop the steel mill project in Malaysia, a ferroniobium one in Brazil and a coal mine in Canada by holding stakes in them and cooperating with other companies.

As a steel giant in China and one of the largest state-owned enterprises in Beijing, Shougang aims to create a brand-new capital platform to achieve the joint and coordinated development of its steel and integrated city service businesses.

Shougang said in August that it would capitalize on equity operations to promote the transition from physical goods management to value management and from business control to financial control, moving its business focus from steel to multiple industries.