Chesterfield reveals massive property losses in China
CHESTERFIELD, the investment holding firm of MKI Corp, has written down a $130 million China property project it bought last year to a mere $1,000.
Ironically its partner in the deal, which has disappeared, was a Hong Kong company named Good Faith International.
Chesterfield's annual report, released yesterday reveals for the first time details of the company's disastrous dealings in China.
The development, Fu Yuen Gardens near Dongguan, in Guangdong province, has been written down to a nominal sum and a project in Zhongshan, also in Guangdong, previously in the accounts at $62.1 million, was written down to $30 million.
Chesterfield took an interest in eight blocks of Fu Yuen Gardens in April last year and handed over Chesterfield shares valued at $124.5 million to Good Faith. It also agreed to pay a further $5.5 million in cash when the blocks were completed, scheduled for August 31.
Good Faith has been collecting the cash from pre-sales.
'At the date of presentation of these statements,' says Chesterfield in the annual report dated September 2, 'only preliminary site work had been completed and Good Faith could not be located.' The share price of Chesterfield, which was previously chaired by financier Arthur Lai Cheuk-kwan, has slid 20 per cent since September 1 to a record low.
Its parent, MKI, has been suspended for three months by the Securities and Futures Commission.
MKI's annual report, also released yesterday, discloses details of property development rights in Chengdu, in Sichuan province, which are estimated to have cost the firm $109 million and which have also been written down to a mere $1,000.
The MKI report says that those rights have no tangible underlying assets and that the successful outcome of the project is considered in now to be in doubt.