(Yicai) June 11 -- Shares of Sino-Ocean Group Holding jumped after the cash-strapped developer said it plans to raise funds to pay off debt by selling a majority stake in a Beijing property project for CNY4 billion (USD550 million).

Sino-Ocean [HKG: 3377] closed 6.7 percent higher at 48 Hong Kong cents (6 US cents) a share in Hong Kong today, after earlier surging as much as 17.8 percent.

Sino-Ocean will sell half of the project to China Life Insurance, the developer’s biggest shareholder, for CNY3.1 billion and 15 percent to partner Swire Properties for CNY900 million (USD124.2 million), the Shanghai-based firm said on June 7.

Following the transaction, China Life and Swire Properties will each own half of the project, while Sino-Ocean will no longer have rights or interests in the development, it added.

Co-developed by Sino-Ocean and Swire Properties, the project is being built in Chaoyang district and is mainly office space. It is scheduled for completion in 2025 or 2026.

Sino-Ocean is in a cash crunch resulting from the downturn in the Chinese real estate market. As of the end of last year, it had just CNY2 billion of cash and cash equivalents. The firm’s liabilities were about CNY8.5 billion bigger than its assets, and total debt stood at CNY96.1 billion (USD13.3 billion), with CNY69.8 billion due within a year and CNY11 billion within one to two years.

Sino-Ocean can rejoin the Beijing project when its financial position improves, it said. With the right of first offer, Sino-Ocean can repurchase the stake sold to Swire Properties two or three years after the deal is closed and that sold to China Life Insurance from Sept. 30, 2037.

Editor: Futura Costaglione