(Bloomberg) -- Singapore’s City Developments Ltd. is selling its stake in Chongqing Sincere Yuanchuang Industry Co. for $1, as it ends the tumultuous backing of the cash-strapped Chinese developer.

Sonic Investment Pte., a wholly-owned subsidiary of the Singapore real estate group, will sell a 63.75% equity interest in HCP Chongqing Property Development Co. -- which owns an 80.01% stake in Sincere -- to Sure Spread Ltd., an unrelated third party incorporated in the Republic of Seychelles, according to a statement published late Friday.

The transaction takes into account “the current liquidity issues and potential bankruptcy reorganisation of Sincere,” the statement said.

City Developments, led by Chief Executive Officer Sherman Kwek, acquired a majority stake in Sincere last April but the pandemic and China’s “three red lines” policy increased liquidity constraints at the unit, forcing losses on the broader Singaporean company. Sincere has been trying to stave off a bankruptcy application.

In the statement Friday, City Developments also said it is increasing its stake in a technology park in Shenzhen by transferring Sincere’s 15.4% holding in Shenzhen Tusincere Technology Park Development Co. to a wholly-owned subsidiary. The transfer is being considered a partial repayment of a loan.

The Sincere divestment and the Shenzhen Tusincere agreement “allow the Group to exit its investment in Sincere, and avoid being engaged in a possibly long drawn bankruptcy reorganisation of Sincere,” the statement said.

All of City Developments’s nominee directors and officers will resign from Sincere and its related companies after the divestment. The group continues to assess the recoverability of the remaining balance of its financial exposure to Sincere, according to the statement.

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