(Yicai Global) Nov. 15 -- Shares in Sunac China Holdings and its property management unit Sunac Services Holdings plummeted today after the Chinese property developer said it was offloading shares in both companies at a 10 percent discount to repay loans.

Sunac’s share price [HKG:1918] tumbled 12.21 percent to close at HKD14.96 (USD2) while that of Sunac Services [HKG:1516] crashed 17.15 percent to finish the day at HKD13.72.

Sunac will raise USD952 million by issuing 335 million new shares, equivalent to 6.7 percent of total share capital, at a price of HKD15.20 each and by selling 5.1 percent of Sunac Services at a price of HKD14.80 per share, the Tianjin-based firm said today. Both were at a 10 percent discount on yesterday’s closing price.

Half of the funds raised will be used to pay off loans and the rest to supplement working capital, the firm said. Chairman Sun Hongbin will also provide an interest-free loan of USD450 million to the company from his own funds, it added.

After the sale, Sun’s stake in Sunac will drop to 42.3 percent from 45.3 percent but he will remain the biggest shareholder. And Sunac will still be the largest stakeholder in Sunac Services with 64.1 percent equity.

China’s real estate developers have been battling with a tighter financing environment this year, leading to a number of defaults. Sunac has not yet missed any due payments, but earlier this year it sold shares in real estate agency Ke Holdings at a CNY2.7 billion (USD424.9 million) loss to recoup funds.

Editor: Kim Taylor