Hong Kong property

Chinese Estates sells bank stake to ex-chairman’s wife, may pay special dividend

The developer is selling a 9.96 per cent controlling stake in Shengjing Bank to the wife of its former chairman, part of the programme by ailing magnate Joseph Lau to distribute his fortunes

PUBLISHED : Wednesday, 15 March, 2017, 4:21pm
UPDATED : Thursday, 16 March, 2017, 1:00am

Chinese Estates Holdings said it is selling its holdings in a mainland bank to the wife of its former chairman, part of the programme by Hong Kong property magnate Joseph Lau Luen-hung to distribute his fortunes amid deteriorating health.

The property company will sell 577.18 million shares of Shengjing Bank, representing 9.96 per cent of the Shenyang-based lender, to Lau’s wife Chan Hoi-wan for up to HK$7 billion (US$900 million).

The sale of the stake will generate a one-time gain of about HK$2.24 billion, Chinese Estates said in a filing to the Hong Kong stock exchange.

The sale proceeds may be used to pay a special dividend to shareholders, giving Chan, a trustee for her two children with 50 per cent of Chinese Estates, HK$1.12 billion in dividends once the plan is finalised. The company’s current chairman Lau Ming-wai, son of the magnate, will get HK$560 million in special dividend.

Shares of Chinese Estates jumped by as much as 10.8 per cent after the announcement to a six-week high of HK$12.34, while Shengjing Bank’s shares rose 2.6 per cent to HK$7.45.

More assets from Lau’s corporate holdings may be transferred to Chan or other Lau family members, said Prudential Brokerage’s associate director Alvin Cheung Chi-wan.

“It appears that Lau is speeding up the pace of his asset distribution to his wife these days,” Cheung said. “It may reflect the fact that his health is declining.”

Chinese Estates acquired its Shengjing Bank stake in May 2016 for HK$6.92 billion, according to the company’s statement.

After taking a provisional charge for a HK$2.36 billion loss on its investment in the mainland bank last year, the fair market value for the stock was HK$4.56 billion. With the sale this week, Chinese Estates can report a one-time gain of HK$2.24 billion.

Lau, 65, has been ailing. On March 1, the developer transferred his entire 74.99 per cent holding valued at HK$16.99 billion to his wife and son, citing his “very unstable health condition”.

The restructuring, implemented and completed on the same day, means the son will indirectly hold 476.4 million shares representing 24.97 per cent in Chinese Estates through Century Frontier.

Lau also distributed 954.2 million Chinese Estate shares, or 50.02 per cent stake, to be held in trust for Chan’s two children Lau Chung-hok and Lau Sau-wah in the ratio of 65:35.