Court rejects Emperor bid to pull out of soured joint venture
Shares in Emperor Entertainment Hotel fell as much as 4.5 per cent yesterday after a mainland court rejected its bid to break off a troubled joint venture to build a HK$1 billion shopping plaza in Shanghai.
The rejection comes amid Emperor's moves to sell its stake in the yet-to-be-built retail arcade to parent firm Emperor International Holdings for HK$1.06 billion in new shares.
Emperor Entertainment, the Macau casino hotel investor controlled by gambling junket operator Albert Yeung Sau-shing, in 2004 signed a deal to co-develop Emperor Star City in Shanghai with Shenzhen Lianhe Jinhao Investment Development.
The deal called for the Hong Kong firm to contribute land, Shenzhen Lianhe to pay for construction, and both parties to split proceeds from subsequent sales on a 50-50 basis.
Emperor Entertainment sued Shenzhen Lianhe in 2006 for 83.6 million yuan (HK$98.3 million) in outstanding construction payments. The mainland firm launched a counterclaim for 100 million yuan in damages for alleged breaches of the joint-venture agreement.
Shanghai's No 2 Intermediate People's Court rejected both the claim and counterclaim, Emperor Entertainment said on Friday in a stock exchange announcement.
The company said it has already decided to appeal the rejection. After more than six years, the Shanghai shopping plaza remains unfinished beyond foundation and basement excavation work.
Emperor Entertainment said last month it would sell its stake in the project to parent Emperor International in exchange for new shares in the parent company. That deal is to be put before a shareholders' vote on January 31.
The two Emperor firms said they were studying the implications of the court's rejection on their sale and purchase agreement for the Shanghai plaza, saying the 'exact impact is yet to be ascertained'.
The companies said they will update investors after making 'a more concrete analysis of the situation and the impact of the judgment'.
Shares in Emperor Entertainment recouped some of their earlier losses yesterday to close down 0.57 per cent at HK$1.75.