Update | Sunac fires back at Greentown over joint ventures, warns of legal action
"The allegations in the Greentown announcement and the articles are not accurate,” Sunac said in an announcement on January 6
Sunac China Holdings has issued a rebuttal to claims by Greentown China Holdings that Sunac’s attempts to buy out two joint ventures between the two mainland property developers were not legally valid, and threatened possible legal action against Greentown.
“The board has noted that it was alleged in the Greentown announcement and recent news articles that the approval of the transactions by Greentown has not yet been obtained. The allegations in the Greentown announcement and the articles are not accurate,” Sunac said in an announcement on January 6.
“The agreements have been properly authorized and constitute legal and binding obligations of the parties upon signing on 30 December 2014. Accordingly, the company is entitled to proceed with the transactions.
The company is consulting its legal advisers and reserves all its rights to take legal action against Greentown against any impact caused to the company as a result of the allegations in the Greentown announcement,” said the Hong Kong-listed firm.
On Monday, Greentown denied the legal validity of an announcement by Sunac to buy two 50-50 joint ventures for 15.5 billion yuan (HK$19.4 billion) including 4.2 billion yuan in debts.
Last Wednesday, Sunac announced it had obtained Greentown’s approval to take over the entire stakes in the two joint ventures, which together own 17 property projects on the mainland.
Sunac's shares, which were suspended on Monday, resume trading on Tuesday.
Greentown had said in its announcement that its board “firmly” refuted that any legally binding arrangement exists on Sunac’s proposal to buy out the two joint ventures.
“The company would like to stress that the unfounded allegations made, and the unilateral actions taken, by Sunac China without the requisite approvals and consents are unacceptable to the company.
The company is seeking legal advice on the unfounded allegations and the unilateral actions taken by Sunac,” said Greentown, adding that it reserved all its rights “to the fullest extent”.
Greentown said Sunac’s announcement last Wednesday “surprised” the board of Greentown.
While certain undated documents (including undated shareholders resolutions signed by representatives of two 50-50 joint ventures) were signed on 18 December 2014 purporting to facilitate Greentown’s purported sale of its stakes in the joint ventures to Sunac, these undated documents were merely signed in escrow, Greentown explained.
There was an understanding between Greentown and Sunac that these documents would be dated and take effect after Greentown’s board approved the sales, Greentown said.
“None of the agreements for the purported disposals were agreed, finalised and executed along with the signing of the undated documents on 18 December 2014. The entry into of the agreements for the purported disposals on 30 December 2014 was a unilateral arrangement by Sunac,” it said.
Although the proposed joint venture deals were considered by Greentown’s board on 25 December 2014, the board is still evaluating the proposed deals, Greentown clarified.
Greentown shares, which were suspended on January 2, resume trading on Monday.