Somercourt may sue Sino Prosper over allegedly related party deals
British firm says contracts for gold mine, finance business are connected party transactions
Somercourt Investments, a British investment partnership, is contemplating legal action against a Hong Kong-listed firm, Sino Prosper State Gold Resources, over proposed connected transactions with Sino Prosper chairman Leung Ngai-man.
"We probably have to take them to court," a Somercourt spokesman told the .
If Somercourt goes to court, it will initially take action to force Sino Prosper to disclose more information about its two proposed transactions with Leung that resulted in deposits of 120 million yuan (HK$152 million) and HK$200 million being paid to Leung, the spokesman said.
After that, Somercourt could ask for an injunction to stop the transactions, said the spokesman.
The two proposed transactions are planned sales by Leung to Sino Prosper of a gold mine in Guizhou province and a microfinancing business in Jilin.
In December last year, Sino Prosper announced its plan to buy from Leung for HK$850 million the microfinancing business, for which it paid a deposit of HK$200 million to Leung. In December 2011, Sino Prosper said it planned to buy from Leung for 550 million yuan the Guizhou gold mine, for which it paid a deposit of 120 million yuan.
The Guizhou gold mine and Jilin microfinancing business appeared to have been sold at inflated prices, said the Somercourt spokesman. "That is a governance issue."
A circular from Sino Prosper on its proposed purchase of the microfinancing business had been delayed until August 30, the spokesman added. "It worries me that the deposits have been with the chairman for so long."
The total value of the two deposits, HK$350.8 million, was more than double Sino Prosper's market capitalisation of HK$153.6 million, the spokesman said. "It's completely unjustified and totally unusual."
Sino Prosper did not respond to queries.