Shimao seeks majority stake in Shanghai unit
Fulton Mak and Yvonne Liu
Shimao Property Holdings, controlled by billionaire Hui Wing-mau, will transfer 7.7 billion yuan worth of assets to Shanghai Shimao as part of a group restructuring that will give it a majority stake in the Shanghai-listed firm.
The deals would also allow Shimao Property to gain exposure in the mainland market through Shanghai Shimao, so it could raise more funds at a lower cost of capital, Jason Hui, an executive director of Shimao Property, told the South China Morning Post.
Shimao Property will inject 10 retail and commercial projects in exchange for 630 million of Shanghai Shimao's A shares at 12.05 yuan each, representing a 49.8 per cent discount to the stock's Monday close of 23.99 yuan.
Shimao Property will also buy 750 million yuan worth of Shanghai Shimao shares through its partly owned Shanghai Shimao Enterprise Development, bringing its effective stake in the Shanghai-listed company to 64.2 per cent.
Mr Hui said his company aimed to lift the stake in Shanghai Shimao to 74.3 per cent by buying out Shimao Enterprise.
The deals would generate a one-off gain of 1.2 billion yuan, which could be booked into the company's accounts in the first half of next year, Shimao Property said.
After the restructuring, Shanghai Shimao would focus on commercial properties, while Hong Kong-listed Shimao Property would mainly develop residential and hotel projects, Mr Hui said.
Shimao Property expected total contract home sales to reach 85 billion yuan between next year and 2010 as the group reorganisation could hasten project development and improve the use of capital and resources, he said.
Contract sales would probably amount to 8.9 billion yuan this year.
'We aim for a separate listing for the hotel business in the long run,' probably in 2009 and on the Hong Kong bourse, Mr Hui said.
Shares of Shimao Property, which resumed trading in the afternoon after the morning suspension, closed up 0.21 per cent to HK$23.90.
Shares of Shanghai Shimao advanced 3.38 per cent to close at 24.8 yuan.