Baoneng Group came out swinging yesterday in its bid for mainland property giant China Vanke, insisting that its funding strategy is sound and saying it will release more information about its hostile takeover.
Baoneng, a Shenzhen-based property and insurance conglomerate, made headlines early this month when it became Vanke’s biggest shareholder with more than 20 per cent of the company.
The move triggered a war of words, with Vanke chairman Wang Shi saying he did not welcome Baoneng as the largest shareholder. Wang also said Baoneng lacked credibility and branded the bid “a gambler’s act”.
According to mainland media, Baoneng borrowed heavily to fund the takeover. Reports said Baoneng funded its Vanke share purchases by borrowing at a leverage ratio of 14.29 from China Zheshang Bank.
But the Shanghai Securities News yesterday quoted the company as saying that it had always had a good credit record and never financed through high leveraging. “It is Baoneng’s strategy to control leveraging, maintain stable business operations and ensure risks are controllable,” a Baoneng official was quoted as saying. It was the first time since it launched the bid that Baoneng had replied publicly to concerns about its funding sources.
Wang and Vanke’s management had appealed to other shareholders and new investors to help stop Baoneng from becoming the biggest shareholder.