Future Land shares tumble in resumed trade after company says chairman ‘being investigated’
Future Land says chairman investigated by mainland authorities for ‘personal reasons’
Future Land Development shares slumped to a three-month low after the company said its chairman and controlling shareholder Wang Zhenhua was under investigation by local discipline authorities.
The Shanghai-based developer’s shares tumbled 5 per cent in resumed trading, ending at HK$0.95 in Hong Kong, their lowest since September 7. Earlier in the session the shares had dropped as much as 13 per cent.
In a statement to the Hong Kong stock exchange Friday, the company said Wang “is currently being investigated by the Commission on Discipline Inspection of Wujin of Changzhou for personal reasons. Mr Wang may continue to take part in decision makings of the Company’s major matters via appropriate means. The board of directors (the “Board”) of the Company is of the view that the investigation of Mr Wang is not related to the operations of the Group, which remain normal. The Board does not expect the investigation of Mr Wang to have any impact on the operations and financial positions of the Group.”
The statement did not make it clear whether Wang was under detention.
Moody's changed the outlook on Future Land Development to negative from stable on Monday.
"The negative outlook reflects the uncertainty over the company's operations and funding support created by the investigation of its key shareholder, Mr. Wang Zhenhua," says Stephanie Lau, a Moody's assistant vice president, adding that Wang has been the key decision maker in the company's business strategy and in the execution of its development business.
The company had requested a suspension in trade of its Hong Kong and Shanghai-listed shares on Friday.
Kenny Chan, Vice President and Company Secretary of Future Land, said in a phone interview with the South China Morning Post that the company’s operations remain normal, and that he remained “positive” to the company’s future. He also said the company would make timely disclosure of issues related to debt repayments.
The company plans to announce its annual results and meet media in Hong Kong late next week.
Fifty-three-year-old Wang founded Future Land in 1993 in Changzhou, Jiangsu province. The company later moved its headquarters to Shanghai in 2009 to shift development focus from Changzhou to Shanghai and other big cities nearby.
On January 11, mainland media reported Lin Guangyao, deputy party chief of Changzhou’s Wujin District was under investigative probes for serious disciplinary violation. It is not clear yet if Wang’s case is related to Lin.
Wang is the latest property tycoon to be involved in the countrywide anti-corruption campaign prompted by President Xi Jinping, following the investigation over Guangdong-based developer Kaisa and Agile property’s founders in the past two years.
The “disappearance” of Kaisa’s founder has triggered a series of debt defaults and overseas investors’ worries when investing in bonds issued by Chinese developers. Kaisa is still under debt restructuring.
Future Land’s US$350 million 10.25 per cent notes due 2019 plunged by a record 10 US cents to 98.3 US cents as of 10:21 a.m in Hong Kong, the lowest since July last year, according to data compiled by Bloomberg.