Glorious buyout on the cards for Rongsheng founder

PUBLISHED : Saturday, 23 November, 2013, 2:45am
UPDATED : Saturday, 23 November, 2013, 2:45am

Mainland developer Glorious Property will be taken private by Zhang Zhirong, the founder of debt-laden shipbuilder China Rongsheng Heavy Industries.

The 4.6 billion yuan (HK$5.8 billion) deal would be financed by an external loan facility and Zhang reserved the right to seek disposal and structuring possibilities after delisting, the company said in a statement on Thursday.

Rongsheng also announced that a mainland local government had demanded a payment of about 1 billion yuan from it.

Shares of Glorious Property, which had been suspended from trading since October 21, yesterday soared as much as 40.3 per cent to HK$1.74 from their last traded price of HK$1.24 and near their proposed buy-back offer of HK$1.80.

The stock ended the day 33 per cent higher at HK$1.65 while the Hang Seng properties index closed up 0.35 per cent.

Before yesterday's trading, the stock had hovered between HK$1.09 and HK$1.26.

"The depressed price of the shares has had an adverse impact on the company's reputation among customers, and therefore on its business and employee morale. The implementation of the proposal would eliminate this adverse impact," the company said.

Glorious Property has 30 development projects spread across 12 cities including Beijing, Shanghai and Tianjin.

The shares of mainland developers have been weighed down by a slowing economy and government measures to take some heat off the real estate market.

A global vessel glut has dented Rongsheng, the country's largest private shipbuilder founded by Zhang in 2005, forcing it to seek a government bailout.

As a result, Zhang himself has slid in the league table of wealth. He has moved down to rank 79th in Forbes' China rich list with a net worth of 9.8 billion yuan this year from No48 with assets worth 10.7 billion yuan a year earlier.