• Sun
  • Dec 28, 2014
  • Updated: 4:05am

Neo-China falls 43pc as trading resumes

PUBLISHED : Saturday, 26 June, 2010, 12:00am
UPDATED : Saturday, 26 June, 2010, 12:00am
 

Shares of beleaguered developer Neo-China Land Group plunged 42.83 per cent yesterday when they resumed trading after a hiatus of more than two years.

Shanghai Industrial Holdings earlier announced it had completed the purchase of a controlling stake in the company. The stock fell HK$2.12 to HK$2.83, making it the market's biggest loser of the day.

Neo-China, which had been suspended from trading since January 22, 2008, said on Thursday night that Shanghai Industrial had paid HK$2.32 a share to acquire a 45.02 per cent stake in the developer through the purchase of both new and existing shares.

Shanghai Industrial will offer to buy all outstanding stock, convertible bonds and warrants, according to the announcement.

The completion came five months after Neo-China said it had agreed to make Shanghai Industrial its largest shareholder in a deal worth as much as HK$2.75 billion.

Ratings agencies changed their outlooks to positive after the investment. Standard & Poor's yesterday placed a 'CCC-minus' long-term corporate credit rating on Neo-China. It also placed a 'CC' rating on the developer's US$400 million senior unsecured notes due in 2014.

On June 15, Moody's Investors Service confirmed Caa3 corporate family and senior unsecured ratings for Neo-China.

Neo-China had difficulty repaying its debts after fast-paced expansion in 2006 and 2007.

The architect of the aggressive expansion was former chairman Li Songxiao, a 43-year-old Zhejiang-based developer who founded Beijing Xinsong Investment Group in 1999.

In 2003, the company made a back-door listing in Hong Kong, changing its name first to Neo China Group and later to Neo-China Land Group. Since then, it has aggressively expanded its mainland portfolio.

Neo-China has dumped assets to stay afloat, disclosing three disposals in its results for the half-year to October last year that raised more than HK$1.5 billion in cash.

It also sold a wholly owned subsidiary last month for HK$1.1 billion.

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