Haitai Stores Co said Thursday it would sell its Seoul-based Haitai department store to the Shinsegae Group.

The company said it had been promoting the sale of the department store this year as part of a plan under court management and a contract will be signed with the group Friday at a price of 35bn won ($27m).

The company said it would use the proceeds to settle its debts.

Haitai expects the deal to help solve its liquidity problems since the firm has already switched 181bn won ($138m) in debt to equity and sold land in Incheon for 21bn won.

The company said it projects to save 2bn won ($1.52m) in annual interest on its debts.

The sale of the department store will cut the firm's current debt ratio to below 171 per cent and enable Haitai to focus on the supermarket retailing business, a company official said. The firm will also be able to sell real estate worth 90bn won over the next 10 years, he added.

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Department Stores 2000

Retailing in Hong Kong 2001