Easyknit International president and chief executive Koon Wing-yee plans to sell a building to the company for $5 million more than he paid for it.
The deal will be partly financed by warrants Easyknit issued last September, when the clothing exporter sold 62.4 million at $1.10 each, aiming to spend $63 million of the proceeds on an office building for sales staff. Most of the proceeds will now go to Mr Koon.
Mr Koon, who owns 53.3 per cent of Easyknit, said yesterday the company would pay Wellmake Investments, a company he owns with his wife, $97.89 million in cash for the property.
Easyknit also will assume Wellmake's $27 million in bank loans against the property, in Cheung Sha Wan, Kowloon. This makes a total investment for Easyknit shareholders of $125 million.
Tsang Yiu-kai, Easyknit's vice-president and financial controller, said the building was recently valued by independent property surveyors Dudley Surveyors at $125 million.
He said Mr Koon bought the property 'about two years ago for $120 million'.
Mr Tsang said the deal 'could be very good for the company' and denied any issues of corporate governance were at stake.