This undated photo captures visitors at China Evergrande Group's booth during a high-tech expo in Shanghai in March 2021. (PHOTO / CHINA DAILY)

Chinese Estates Holdings announced on Thursday that it will dispose of up to 751.09 million China Evergrande Group shares in the market or through block trades.

The company said it already sold 108.91 million shares between Aug 30 and Sept 21.

The mandate to sell the remaining interest will be valid for 12 months from the date when shareholders approve it, the company said in a filing to the Hong Kong stock exchange.

Chinese Estates Holdings' securities investments in China Evergrande Group, including listed shares and bonds, reached HK$13.41 billion ($1.72 billion), or 35.8 percent of total assets

The group’s securities investments in China Evergrande, including listed shares and bonds, reached HK$13.41 billion ($1.72 billion), or 35.8 percent of total assets.

Chinese Estates said it would book a loss in other comprehensive income of about HK$1.37 billion for the year ending Dec 31, 2021 from the share disposal.

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The carrying amount, or the original cost of an asset as shown in a company’s books minus the accumulated depreciation of the asset, was HK$1.622 billion.

The company said China Evergrande shares were bought in 2017 and 2018. 

China Evergrande is estimated to have $305 billion in liabilities and has been causing jitters in global markets. For the year ended December 2020, the net debt was 535.8 billion yuan.

The disposal and the possible disposal provide immediate liquidity, the company said, adding that this will allow it “to re-allocate the proceeds for other reinvestment opportunities when they arise”.

In the six months to June 30, 2021, the group said it received China Evergrande’s final dividend for 2020 of about HK$156.5 million from 860 million Evergrande shares held in aggregate.

The carrying amount of the mandate shares as at Dec 31, 2020, was about HK$11.19 billion. Assuming that all 751.09 million mandate shares are to be disposed of based on the closing price of HK$2.27 per share on Sept 21, Chinese Estates said the group will book a loss in other comprehensive income of about HK$9.48 billion for the year ending Dec 31, 2021. 

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In the first half, Chinese Estates reported a net loss of HK$37.28 million, compared with a HK$785.9 million profit the year before. Current liabilities exceed its assets by about HK$3.078 billion. As at June 30, 2021, Chinese Estates had total debt of HK$8.30 billion.

Revenue sank by 63 percent from the year before to HK$726.2 million, mainly due to the drop in dividend income from China Evergrande.