Adamas to sell China resort stake due to 'sluggish' market

(ShareCast News) - Adamas Finance Asia is to sell its 15% stake in a resort development in China for ¥113.58 (about $16.4m) due to "sluggish" Chinese property market and to raise funds to invest in high-yield projects.The AIM-listed company agreed to sell its interest in the Tian Ton Shan villa project in Fujian Province, which was valued at $48.4m at the end of June 2016.The sale is in line with its policy to sell the legacy portfolio bought in a reverse takeover in February 2014 in order to invest the funds realised in income-generating financing opportunities to pay regular dividends.Chairman John Croft said: "The global economy and the Chinese property market in particular remain sluggish and we have therefore elected to exercise the put option and to enter into the memorandum of understanding in order to generate funds to invest in line with our policy."This marks another step in our progress towards the realisation of our legacy asset portfolio for reinvestment in high-yield projects. Although the proceeds represent a substantial discount on book value, we are working closely with the Adamas team in Hong Kong to identify investment opportunities similar to those that are starting to generate attractive returns for the company."Through its subsidiary, Lead Winner, the company holds a 30% interest in S&T Group Holdings, which in turn holds a 50% stake in Changtai Jinhongbang Real Estate Development Company (CJRE) and its resort development project, the Tian Ton Shan project.Under the terms of the deal with shareholders of S&T, Lead Winner required Wang Chun Fang, the majority holder of CJRE, to buy shares representing 10% of S&T from Lead Winner for ¥50m ($7.2m).Lead Winner also entered into a memorandum of understanding with Wang Chun Fang to sell its remaining 20% holding in S&T for ¥63.58 ($9.2m). However, the company anticipates that the sale and purchase agreement will be entered into with R&F Properties, a Guangzhou-based real estate developer which will buy S&T.Payment of ¥51.58m ($7.4m) of the ¥113.58 is expected within 10 days of receipt of the ¥515.8m ($74.4m) from R&F by Wang Chun Fang, which is expected one month following completion of R&F's due diligence.The remaining ¥12m ($1.8m) due to Lead Winner will be made in cash through phased payments of 10% of each payment received from Wang Chun Fang. This is expected to result in a $32m loss on disposal.