Distressed developer China Evergrande will sell a half-stake in its property management unit to Hopson Development for more than $US5 billion ($A6.88 billion), Chinese media reports say.
The sale news came after both Evergrande and Hopson requested trading halts ahead of a major transaction.
Once China's top-selling developer, Evergrande is facing what could be one of the country's largest-ever restructurings as a crackdown on debt leaves it unable to refinance $US305 billion in liabilities.
Evergrande said it requested a trading halt pending an announcement about a major transaction and Evergrande Property Services Group said the announcement constitutes "a possible general offer for shares of the company."
China's state-backed Global Times said Hopson Development was the buyer of a 51 per cent stake in the property unit for more than $HK40 billion ($A7.1 billion), citing unspecified other media reports.
Hopson said it had suspended trading in its shares, pending an announcement related to a major acquisition of a Hong Kong-listed firm and a possible mandatory offer.
The possible deal seemed to rekindle broader concerns about the risk of contagion or of a hit to China's property sector and the broader economy if Evergrande collapses or is liquidated at rock-bottom prices.
"Looks like the property management unit is the easiest to dispose in the grand scheme of things, indicative of the company trying to generate near term cash," said OCBC analyst Ezien Hoo.
"I'm not sure this necessarily means that the company has given up on surviving, especially as selling an asset means they are still trying to raise cash to pay the bills."
Beijing has prodded government-owned firms and state-backed property developers to purchase some of Evergrande's assets, people with knowledge of the matter told Reuters last week.
It was unclear whether Hopson's statement was related to Evergrande Group. However, Hopson stands in good stead compared with other property developers, owning more assets than liabilities, improving profit in the first half and paying a dividend.
With liabilities equal to 2 per cent of China's gross domestic product, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world.
Initial worries have eased somewhat after China's central bank vowed to protect homebuyers' interests, but ramifications for China's economy kept investors on edge.
Monday's share trading suspension sent a shiver through the offshore yuan, which fell about 0.3 per cent against the US dollar, and weighed on the Hang Seng benchmark index, especially financials and other developers.
Shares in Evergrande have plunged 80 per cent so far this year, while its bonds trade at distressed levels. Shares in its property services unit have dropped 43 per cent as the group scrambles to pay its many lenders and suppliers.
The cash-strapped group said last month that it had negotiated a settlement with some domestic bondholders and that it had made a repayment on some wealth management products, largely held by Chinese retail investors.
Holders of the company's $US20 billion in offshore debt appear further back in the queue and bondholders have said interest payments due on bonds in recent weeks have failed to arrive.
Evergrande faces deadlines on dollar bond coupon payments totalling $US162.38 million in the next month.