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• • Evergrande is selling its entire stake in a film and television streaming company for $273 million
• • It will offload its entire 18% stake in online video-streaming and Internet home services company at around a 24% discount

Chinese real estate giant Evergrande is selling its entire stake in film and television streaming company HengTen Networks Group for $273 million, closing a six-year-long business with streaming giant Tencent Holdings.

Evergrande agreed to unload its remaining 18% stake in online video streaming and Internet home services company at around a 24% discount to the Hong Kong-listed company’s stock price a day earlier. The real-estate giant said that it would incur a loss equivalent to $1.1 billion from the disposal as the sale price was sharply lower than the book value of HengTen’s shares, recorded at the end of June.

READ MORE: What is Evergrande crisis? Why are world markets jittery over Chinese group’s likely default?

The new buyer is a Hong Kong-based company controlled by an investor named Li Shao Yu.

The HengTen story

HengTen is to China what Netflix is to the rest of the world. HengTen's other big corporate shareholder is Tencent Holdings which bought a 7% stake from Evergrande in July for about $266 million.

Wall Street Journal reported that Evergrande and Tencent together paid less than $100 million in 2015 to jointly take over Mascotte Holding’s struggling business, which had suffered heavy losses due to activities such as securities trading and sales of camera accessories. 

The company witnessed a doomed stint in manufacturing solar-grade polysilicon in Taiwan. Evergrande acquired a 55% stake in the company while Tencent took over 20%, and converted it into an internet community services network provider, mentioned the report. 

The residents of Evergrande-built properties, as well as homeowners, could avail the services provided by the company, which also diverged into furniture, household fittings, and interior-design services online. The company also expanded into online content streaming and acquired existing video streaming platforms.

Someone’s trash, another person’s treasure

On Thursday, the shares of HengTen jumped 25% after Evergrande’s announcement. Earlier this year, Tencent bought a chunk of Evergrande’s stake, raising its own to 23.9%, reported WSJ. 

READ MORE: Chinese central bank breaks silence over Evergrande crisis

Evergrande reported around $300 billion in liabilities and is struggling to avoid defaulting on its international bonds. The cash-strapped real estate developer has been scrambling to sell assets to make interest payments for the same. It has sold off two jets, and stakes in a Chinese bank and a Hong Kong residential project to raise money.

The troubled Chinese real estate giant staved off a widely expected default in October by making an overdue interest payment of $83.5 million to international bondholders. 

ALSO READ: Evergrande averts default by making $83.5m interest payment

(With inputs from Wall Street Journal)

Picture Credits: King World News