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Evergrande to sell 29.9% stake in Calxon

Debt-laden property developer will relinquish control of smaller peer

China Evergrande will enhance cash flow by selling much of its stake in fellow property developer Calxon, a source close to the matter says.   © Reuters

HONG KONG  (Reuters) -- Debt-laden property developer China Evergrande Group will sell over half of its stake in smaller peer Calxon, giving up its control of the company, according to a filing by Calxon on Monday.

Evergrande's unit Kailong, which owns 57.75% in Calxon, will sell 29.9% of the company to Shenzhen Huajian Holding for an undisclosed amount and give up its voting rights, the filing said.

The stake was worth 2.5 billion yuan ($386 million), based on Calxon's Friday closing price.

A source close to the matter said the sale will enhance Evergrande's cashflow, and resolve the issue of owning a controlling stake in a competitor.

Evergrande did not have immediate comment.

Calxon's shares were suspended on Monday. Evergrande's Hong Kong-listed shares jumped 7.6% in morning trading.

Shares in its units Evergrande Services and Hengten Net also rose 6.7% and 6.2% respectively.

Evergrande and its units have come under pressure due to growing liquidity concerns. Earlier this month, China's most indebted property developer said it was arranging payment for some of its project companies' commercial paper that had not been repaid on time.

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