AF Global on Monday said that its wholly-owned subsidiary, LC Logistics, is looking to sell its 55 per cent stake in a property development joint venture (JV) in China for 292.8 million yuan (S$57.6 million), to affiliates of the JV partner.

Xuzhou Yinjian LumChang Real Estate Development is a JV between LC Logistics and Beihai Yinjian Investment (China).

The JV is engaged in the development of around 284,000 square metres of above-ground gross floor area for an integrated mixed development comprising high rise residences, retail, offices and a hotel in China.

Mainboard-listed property and hospitality company AF Global had disclosed in August 2018 that there are disputes and litigation under court proceedings between the group and Beihai Yinjian that affect the JV.

These have resulted in an "irrevocable breakdown" of both parties' working relationship in respect of the JV, said AF Global on Monday. Thus, the proposed disposal provides a timely opportunity for AF Global to monetise its investment.

Net proceeds from the proposed disposal will strengthen the group's cash flow, AF Global said. The company will also evaluate opportunities to deploy the net proceeds to maximise returns to its shareholders, including the possibility of paying dividends.

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The buyers in the proposed stake sale are affiliates of Beihai Yinjian. They are Beijing Jinyinjian Taxi, which will acquire a 25 per cent stake, as well as Beijing Yinjian Automobile Repair, which will buy 30 per cent.

Conditions precedent include the two purchasers having successfully procured financing for a sum equivalent to the aggregate consideration of 292.8 million yuan.

AF Global will convene an extraordinary general meeting to seek shareholders' ratification of the disposal. It added that the proposed deal was unanimously approved by the company's directors.

Meanwhile, LC Logistics and the buyers have also entered into a mediation agreement, in connection with the equity transfer framework agreement signed for the proposed stake sale.

Under the mediation agreement, the disputes and litigation between the parties regarding the JV will be withdrawn - save for an outstanding litigation in relation to the dissolution of the JV, which will be resolved once LC Logistics receives the funds as per the conditions precedent.

The JV is a project legacy from AF Global's previous controlling shareholder when the company was then known and listed as LC Development.

AF Global shares were trading at 12.5 Singapore cents as at 9.59am on Monday, up one cent or 8.7 per cent.