Cheung Kong loses out over Apex
Firm seeks harmony in ending deal but says sale of hotel units not collective investment scheme
Cheung Kong has emerged as the loser in the nearly three-month long tussle with the government over the controversial sale of its hotel development at Kwai Chung.
Yesterday, the developer said in an announcement that after discussions with the Securities and Futures Commission, it would arrange for the cancellation of the provisional contracts and sales and purchase agreements of the hotel rooms at Apex Horizon.
Cheung Kong insisted that it did not agree with the securities watchdog that the sale constituted a collective investment scheme, which requires special approval.
However, it said the difference in legal opinion might lead to uncertainty for buyers.
The sale of the hotel suites, which made headlines in February as it was the first time in Hong Kong that a developer had sold hotel rooms - which are classified as commercial property - individually to buyers.
On February 18 and 19, Cheung Kong sold all 360 units in Apex Horizon, reaping HK$1.4 billion - almost seven times the land premium it paid the government when it applied to change the site from industrial to non-industrial use.
The deal immediately drew the government's scrutiny as Cheung Kong had exploited a legal loophole, not plugged until July 2003, that allowed hotels to be sold in parts.
Cheung Kong had gained the site before July 2003.
As the hotel units are classified as commercial properties, buyers do not have to pay stamp duty, including the 15 per cent special duty imposed on non-local residents last year to cool the market.
Chief Executive Leung Chun-ying said he had instructed departments to follow up on the sales at Apex Horizon, while other senior government officials including Chief Secretary Carrie Lam Cheng Yuet-ngor and Secretary for Development Paul Chan Mo-po said the government would examine the sale.
Cheung Kong had earlier gained the upper hand in the dispute as it did nothing illegal in relation to the land lease. Cheung Kong deputy chairman Victor Li Tzar-kuoi reiterated that the sale had complied with the law.
On March 4, Civic Party legislator Dennis Kwok Wing-hang wrote to the SFC, requesting the regulator investigate the sale as it fell into the definition of a collective investment scheme.
Under such a scheme, approvals must be sought from the commission before the offer could be made to the public.
Cheung Kong executive director Justin Chiu Kwok-hung yesterday said the company did not agree that the sale came under the definition of collective investment scheme.
Still, the company agreed to cancel the transactions as buyers will suffer in the event of protracted legal action.
"Harmony is precious," Chiu said.
- Cheung Kong releases first batch of 65 guestrooms at the Apex Horizon for sale
- All rooms sold out in one night
- 130 guestrooms released for sale; 50 other rooms for internal sale
- The government warns it will take action if the sale of the guest rooms violated the law
- All the guestrooms are sold. Cheung Kong generates more than HK$1.4 billion
- Cheung Kong says it will cancel the sales