SINGAPORE (Aug 24): Metro Holdings confirmed on Monday that it is in talks with H-Change Real Estate Group on a potential disposal of its indirect 30% interest in a Chinese company called Nanchang Top Spring whose main asset is a mixed use development, Nanchang Fashion Mark located in Nanchang, with leasable/saleable GFA of about 780,000 sq m.

The Edge Singapore last Wednesday reported market watchers said the talks were responsible for the 6.2% surge in Metro’s share price to $1.20 on Aug 16. As at 3.25pm, shares in Metro are up 1.5 cents at $1.195 on volume of 1.13 million.

See: Shares in Metro rise on sale of China property

In a filing last night, Metro however stressed that no legally binding agreement has been signed yet by Metro Shanghai (HQ), the group's subsidiary that owns a direct 30% stake in Nanchang Top Spring.

"As there is no certainty that the potential divestment will materialise, shareholders are advised to exercise caution when dealing in the shares of the company and to refrain from taking any action in respect of their investments which may be prejudicial to their interests," says Metro in the filing.

Top Spring is said to be selling for HK$15.32 billion ($2.7 billion) eight properties at various stages of development in six cities in China with a net saleable/leasable GFA of 1.97 million sq m.

Top Spring’s net gain is likely to be around HK$7.93 billion. Metro holds a 16.1% stake in Top Spring and 19.3% of its voting rights. Metro’s share of the proposed sale by Top Spring of its Chinese properties should it be successful translates into a $186 million gain or 23 cents per share.

After the completion of the sale, Top Spring will still own a 14% stake in Nanchang Top Spring Real Estate Co.

According to Metro’s annual report, it paid $48 million for a 30% stake in Nanchang Top Spring.