Chinese Estates Holdings has proposed a HK$637.2 million asset sale to subsidiary Chi Cheung Investment in a deal that will raise its shareholding in the latter to 94.5 per cent.
It said a previous intention to develop Chi Cheung into its property development arm might not be beneficial to the group, and this latest deal was aimed at re-focusing Chi Cheung's property business.
Chi Cheung also proposed a reorganisation of its share capital. It will consolidate every 50 shares of 10 HK cents each into one consolidated share of HK$5 each. It then will reduce the nominal value of each consolidated share from HK$5 to one HK cent each.
The company will acquire 13 property assets including warehouses, industrial, commercial premises and farmland in Kowloon and the New Territories, as well as properties in Tianjin, Shantou and Panyu from Chinese Estates.
It will issue 11.85 billion shares, nearly four times the company's existing 2.97 billion shares, to satisfy the bulk of the acquisition cost for the 13 assets.
Analysts said the deal would see Chinese Estates' stake in Chi Cheung rise from 72.7 per cent to 94.5 per cent while Chi Cheung's minority shareholders would see their interest diluted significantly.
