(Yicai Global) Jan. 4 -- Shares in First Service Holding plummeted as much as 48 percent today after the sale of a majority stake in the property management arm of debt-laden Chinese developer Modern Land China to a unit of developer Sunac China fell through as the two parties could not agree on a price.

First Service’s share price [HKD:2107] was trading down 37.69 percent at HKD0.81 (USD0.10) as of 1:30 p.m. China time today. Earlier in the day it had plunged to HKD0.67. Sunac Services Holdings’ stock [HKG:1516] was trading up 8.62 percent to HKD7.56 (USD1).

"The vendors suddenly reversed the consensus between the two parties on Dec. 31, 2021, which resulted in the Formal Agreement not being signed on the Long Stop Date," Sunac Services said in its filing to the Hong Kong stock exchange yesterday.

First Service’s Chairman Zhang Lei changed his mind, Yicai Global learned from a person familiar with the matter. First Service originally agreed on Nov. 1 to sell a 32 percent stake to Sunac Services for CNY693 million (USD108.9 million). But then the Tianjin-based property services firm adjusted the transaction price based on overall changes in the property management sector, the person added.

The termination of the deal will be a big blow to Beijing-based Modern Land. The small developer defaulted on a USD250 million bond in October due to ‘unexpected liquidity issues’ caused by adverse factors such as the macroeconomic, realty and pandemic environments, it said at the time. It has another USD200 million note set to mature on Feb. 25 and has accumulated debts of USD1.1 billion.

"Modern Land’s liquidity problems give rise to material uncertainty regarding the sustainability of First Service’s business as well as the collectability of its receivables from Modern Land," Sunac Services said.

Editors: Tang Shihua, Kim Taylor