Shareholders reject Chinese Estates privatisation offer by Joseph Lau’s family

The offer to take Chinese Estates Holdings private by Hong Kong magnate Joseph Lau Luen-hung’s family has collapsed because of opposition from minority shareholders.

The plan was rejected by a majority of minority shareholders present at a special general meeting on Friday, the company said in an exchange filing.

Lau became the majority shareholder of Chinese Estates when his company, Evergo, acquired a 43 per cent stake in 1986. Since then, he has expanded his property investments through Chinese Estates.

Lau’s family offered HK$4 (51 US cents) apiece to public investors on October 6, two weeks after the stock plunged to a 10-year low of HK$2.12.

On Friday, 64 of the 74 shareholders in attendance voted against the scheme, representing 16.53 million shares, or 10.8 per cent of the shares that counted in the vote. That was still enough to scupper the offer.

Before the meeting, a number of angry shareholders said the offer was too low to accept.

“I bought these shares at higher prices, of around HK$13 each, a few years ago for collecting dividends,” said an elderly shareholder who only gave his surname as Choi. Only “fools” would accept the HK$4 offered in the privatisation deal, he added.

On Wednesday, Lui Yu-kin, an individual shareholder with six million shares, said he would vote against the privatisation plan because of the Lau family’s low offer, according to local media reports. He said the owners of a combined 13.35 million shares would join him in rejecting the offer. He added that he would not attend Friday’s meeting in person.

The deal would have cost the Lau family HK$1.9 billion, as it would need to buy back the 21.4 per cent, or 408.38 million shares, that it does not own.

“Its investment in China Evergrande was a wrong decision,” said another elderly shareholder surnamed Au, who has owned the stock for decades after buying it at HK$2.4. He said he bought the shares because of the positive outlook for the company’s high asset value, and that the price offered by the Lau family was too low.

The offer should be increased to HK$6 and HK$8 per share for it to be reasonable, said a shareholder surnamed Chan. He said he had bought the shares for about 30 years because of their generous dividend payouts.

The privatisation offer came a month after Chinese Estates incurred a loss of HK$1.38 billion from the sale of 108.9 million shares of embattled developer China Evergrande Group, whose founder Hui Ka-yan is desperately trying to avert a default and save his Shenzhen-based flagship from collapsing under more than US$300 billion of liabilities.

Chinese Estates said in October that the losses arising from the sale of Evergrande shares had exacerbated its fundamentals. Chinese Estates lost HK$1.38 billion after dumping 108.9 million shares in the Chinese developer in the open market between August 30 and September 21.

When trading resumes on Monday, the share price of Chinese Estates “is likely to drop as investors are worried about its write-off with China Evergrande” holdings, said Kenny Tang, managing partner at financial services company VSFG.