Seazen Group said on Tuesday Asian investment firm PAG’s subsidiary had agreed to buy the Chinese property developer’s business, which controls Shanghai Xingyi Cinema Management, for 1.37 billion yuan. ($187.45 million)

The sale of Changzhou Hengxuan Consulting Management, which owns a 97.6% stake in Shanghai Xingyi Cinema Management, to PAGAC IV Holding II will allow Seazen Group to increase capital and reduce its gearing ratio, the company said in a filing to the Hong Kong stock exchange.

The property developer may use proceeds from the deal primarily for loan and debt repayment, Seazen Group said.

Shanghai Xingyi and Changzhou Hengxuan altogether manage 144 cinemas in China, Seazen Group said.

The deal is subject to certain procedures including a review by China’s State Administration for Market Regulation, the filing said.

Changzhou Hengxuan also agreed to repay loans of 856.4 million yuan owed to Wealthzone Development, a different subsidiary of Seazen Group, the filing said.

Shanghai Xingyi and Changzhou Hengxuan altogether reported unaudited post-tax net profit of 86.8 million yuan in the first six months this year, compared with a post-tax net loss of 64.9 million in 2022, said Seazen.

They reported a combined unaudited net asset value of around 170 million yuan as of end August.

Two management and employee shareholding platforms of Seazen own 1.91% and 0.49% stake in Shanghai Xingyi respectively.

Chinese film producer and cinema operator Hengdian Entertainment last year said it and partners had intended to buy Shanghai Xingyi for no less than 3 billion yuan ($410.48 million), but the parties involved in the negotiations failed to agree on core conditions.

Reuters