(Yicai Global) Aug. 8 -- Yango Group’s shares jumped by the daily limit after the struggling Chinese property developer’s parent company struck a deal with China Huarong Asset Management, a state-owned bad loans manager, to restructure its debt.

Yango [SHE: 000671] soared 10 percent to close at CNY2.26 (33 US cents) a share today. The stock is still down nearly 75 percent from a record high of CNY8.86 in 2020.

Huarong announced on Aug. 5 that it had signed a framework debt restructuring agreement with Yango Longjing Group. This is a specific action to respond to the central government’s demand to defuse risks in the real estate market, according to Gao Gan, assistant to Huarong’s president.

Yango’s debt crisis broke out at the end of last October. The Shanghai-based builder had CNY37.7 billion of unpaid overdue debt as of June 24, including a total of USD165 million in principal and interest on overseas bonds, according to figures it released at the end of June. The firm’s unpaid overdue debt totaled CNY30.2 billion as of the end of April.

To restart stalled housing projects and gets homes delivered to buyers, Huarong said it will take action to defuse risks in the property market and take part in the mergers and acquisitions of troubled builders’ non-performing assets.

Yango’s debt crisis has been a drag on business growth, a source at Yango told Yicai Global earlier this year, adding that it no longer has a sales target. Its priority now is to guarantee that projects are completed and homes are handed over to their buyers, the person said. 

Yango reported a CNY7 billion (USD1.04 billion) net loss last year on revenue of CNY42.5 billion (USD6.28 billion), compared with a net profit of CNY5.2 billion and revenue of CNY82.2 billion in 2020.

Editors: Tang Shihua, Futura Costaglione