Xiamen C&D said the purchase of a 29.95% stake from Red Star Macalline Holding Group, the company's controlling shareholder, would require approval from the state asset regulating authority in the city of Xiamen, which controls Xiamen C&D.
The deal would bring in cash for the holding company which a Fitch Ratings report in September said faced tight liquidity and uncertainties over its ability to refinance onshore bonds.
Red Star Macalline Holding Group plans to unload up to a 3% stake in Red Star Macalline for the purpose of repaying debt, the latter firm said last month.
In July 2021, the holding group agreed to sell 70% stake in a property development unit to an entity linked to Sino-Ocean Group for 4 billion yuan.
Red Star Macalline, the home improvement mall chain, reported a 8.4% year-on-year fall in revenue and a 47.3% drop in net profit in the third quarter of 2022 citing disruption to its businesses caused by COVID-19.
Sluggish new home sales in the world's second largest economy have also hurt demand for home decoration and furnishing.
Property sales by floor area in January-November fell 23.3% from a year earlier, China's statistics bureau reported.
For the first nine months last year, Red Star Macalline recorded total liabilities of 76.0 billion yuan versus assets of 133.7 billion yuan.
Red Star Macalline said on Friday that Alibaba (China) Network Technology, a unit of Alibaba Group Holding, plans to exercise option to convert exchangeable bonds for 248.2 million A-shares in the company at 8.44 yuan per share.
($1 = 6.7147 Chinese yuan renminbi)
(Reporting by Roxanne Liu and Kane Wu; editing by Jason Neely)
