Shanghai Land shareholders may get $1.9b in assets

PUBLISHED : Friday, 29 July, 2005, 12:00am
UPDATED : Friday, 29 July, 2005, 12:00am

BOCHK will receive the lion's share of $1.44b under a liquidation proposal

A liquidation proposal by Shanghai Land Holdings, the Hong Kong-listed vehicle of imprisoned property tycoon Chau Ching-ngai, will release its $1.92 billion assets to shareholders, including BOC Hong Kong (Holdings).

Minority shareholders, who own 25 per cent of the firm, would receive $480 million in cash, or 62.9 cents per share, the company said.

BOCHK, the Hong Kong arm of state-owned Bank of China, will get $1.44 billion, which includes $644 million in cash, equivalent to 28.1 cents per share, and non-cash assets of $796 million, or 34.8 cents a share.

The non-core assets include three Shanghai hotel and real estate projects valued at $735 million and $61 million from various legal claims.

BOCHK controls a 75 per cent stake of Shanghai Land after jailed chairman Chau's New Nongkai Global Investments, which pledged all of its shares of Shanghai Land to the bank, failed to fully repay a $1.77 billion loan.

New Nongkai in 2002 borrowed the money from the bank to finance its takeover of Shanghai Land. According to a press release by BOCHK in June 2003, New Nongkai still owed the bank $741 million.

The loan fell under the spotlight when Shanghai authorities detained Chau in May 2003 in connection with a graft investigation.

Chau, who was ranked China's 11th-richest man in 2002 by Forbes magazine, was subsequently jailed on the mainland for three years in June last year for manipulating share prices and falsifying registered capital.

A probe in September 2003 by the bank revealed the cash had been lent despite risk-management warnings from senior bank officials. The company's shares have been suspended from trading since June 2003.

Shanghai Land said the receivers considered winding up the company was in the interest of shareholders, taking into account the difficulties in maintaining the continued listing status of the firm.

As part of the winding-up arrangement, Shanghai Land said Chau would repay $140 million to BOCHK, and after the bank received the money, it would discharge the receivership over New Nongkai. Receivers Stephen Liu Yiu-keung and Yeo Boon Ann, from Ernst & Young Transactions, will be appointed as the liquidators of the company.

The company said liquidation would be subject to shareholder approval at an extraordinary general meeting. A date is yet to be fixed.

As of June 30 last year, Shanghai Land had a net loss of $158.29 million, against a net loss of $246.66 million in 2003.