The sale was first announced by Lai Sun in a filing on Tuesday and JD.com on Wednesday said it was the buyer.
The net sale proceeds of HK$2.4 billion will help boost cash flow for Lai Sun, which has been scrambling to refinance bank loans and sell assets amid mounting financial stress.
Hong Kong’s debt-laden developers are under growing pressure as property sales slump, prospects for a near-term recovery in the commercial sector remain weak, and funding options dwindle.
Lai Sun’s stake sale involves 12 of the tower’s 27 floors and a number of parking spaces, and would be one of the largest such deals by value in the city this year.
The remaining 50-percent interest in the tower is held by CCB Properties (Hong Kong), a unit of China Construction Bank.
The transaction price represents a 6.7 percent discount to a July valuation, reflecting macroeconomic conditions and market sentiment, the filing said.
Lai Sun expects to book a HK$261 million loss on the disposal, though it will be a non-cash item in its financial reports.
Shares of Lai Sun gained 3.2 percent by late morning, while JD.com eased 0.8 percent.
The broader Hang Seng Index was down 0.4 percent.
“The sale will significantly improve the group’s financial position,” Lai Sun and its parent Lai Sun Garment said in the filing.
Both companies expect to shift from net current liabilities to net current assets after the sale, which is due to close in January, alongside the successful refinancing of a syndicated loan in September.
Lai Sun Development’s auditor flagged uncertainty over its ability to continue as a going concern after the developer reported a HK$2.9 billion net loss for the year ending in July, with current liabilities exceeding current assets by HK$4.5 billion.
The company faces bond repayments of US$524 million next year, the highest among Hong Kong’s cash-strapped issuers.
JD.com said it intends to use the office space for the company.
“JD.com has always been optimistic about its development in Hong Kong,” the company said, adding it would continue to invest around the supply chain to integrate retail, logistics, and technology R&D businesses into the city.
In October, another e-commerce giant, Alibaba, with its fintech affiliate Ant Group, bought the top 13 floors of Mandarin Oriental’s flagship One Causeway Bay office tower in the city for US$925 million. (Reuters)
