Shi Liqian: Launch a proposal because of high risk concern. Pan Sutong: Look forward to personal bidding in the future.
Hong Kong Wen Wei Po (By Liang Yueqin)
Since the deterioration of the Sino-US trade war has caused the global economy to slow down and the recent social disputes in Hong Kong have intensified, Goldin Financial (0530), which won the first runway commercial site of Kai Tak last month for HKD11.1244 billion, announced yesterday to give up the site because most members of the board of directors had voted to suspend the provision of financial assistance to pay the land price, thus the deposit of HKD25 million will be forfeited.
The Goldin Chairman Pan Sutong who is opposed to the forfeiture of deposit emphasizes his confidence in the long-term development of Hong Kong commercial property market and plans to bid on his own when the government relaunch the site.
Goldin gave a piece of annunciation to say they held an emergency board meeting on the previous proposal in response to the request of independent non-executive director Shi Liqian. In the presence of the independent auditor, the management proved to the board that the company had sufficient and available funds to pay the balance of the land price of about HKD11.1 billion. However, three executive directors Zhou Xiaojun, Huang Rui and Xu Huimin, as well as three independent non-executive directors, Shi Liqian, Deng Yaorong and Huang Weiliang, believed that recent social conflicts and economic instability will have a negative impact on the growth of the commercial property market in Hong Kong and voted for suspension of proposals for financial assistance.
As for the chairman of the board of directors who opposed to the proposal, Pan Sutong believes that the recent social conflicts and economic instability will not affect the long-term development of the commercial property market in Hong Kong, and expresses his confidence that the acquisition of the site will bring significant synergies with the group’s current residential site located in Kai Tak No.4 of 4B district, also the independent non-executive director Gao Min also voted to against it. However, since the majority of the votes were in favor, the proposal was adopted.
HKD25 million deposits will be forfeited.
Goldin pointed out, according to the lawyer's legal opinion, the company's paid deposit of HKD25 million will be forfeited, and the Hong Kong government will be able to resell the land at the appropriate time, place and manner as appropriate, for any loss or fee of resale shall be paid by the bidder, namely Junteng Investment of Goldin, and shall be treated by the government as liquidated damages.
Pan Sutong said in a conference call yesterday that he is very fond of the prospects and design of this commercial site and the prospects of the Kowloon East area, and the Group had invested a lot of efforts, also it would have synergy with the current residential land, besides he believed that the property market would not be affected in the long run, so he felt blankly and helpless on the board’s decision.
He said he would actively bid for this commercial land when the government re-launch it if possible, also pointed out that he and the group always had a preference for land investment especially in urban areas, who will try best to reach the end If the target is locked.
He stressed that the Group's residential projects in the same district continued, and pointed out that the Group has investment projects in every corner of the world, also Banks in various regions around the world support the development of the group, so it is ridiculous that the project has to be terminated because of no financing.
In the conference call, a reporter asked if the government has the right to recover the difference when the transaction price of the land fall back to HKD8 billion in the future, while he smiled and replied: "You are too pessimistic, since the land price depends on the market price, so it may be HKD15 billion in the future!"
Shi Liqian also pointed out in a conference call yesterday that at the emergency board meeting of the previous day, the Group Chairman Pan Sutong had proposed whether the project could be transferred to an individual to continue developing, but the existing listed company regulations do not allow this.
He also pointed out that the Group had a positive view on the Government's amendment of the Fugitive Offenders Ordinance, however, the deterioration of the Sino-US trade war has caused a sharp change in the economy, which has already affected the retail market in Hong Kong, together with the Group thinks the hotels, shopping malls and office markets in Kai Tak District is immature, so they believed it is risky to invest HKD18 billion on this project under unclear macroeconomic market conditions in the short and medium term. Shi Liqian said: "As an independent non-executive director of the group, it is natural to propose a risk assessment and make a conservative investment strategy. In the end, with 6 votes in favor, 2 votes against, and minority is subordinate to the majority, they decided to suspend the provision of financial assistance to bidders to pay off the land price."
Shi Liqian expressed, the company had already paid deposit of HKD25 million and some project design fees, which will cause a small loss, however, he emphasized that this decision is "advance with the times", and the initial bid is not a hasty decision, while the decision this time is pessimistic on the Kai Tak commercial and hotel market in the short and medium term on, but the Group is still optimistic about the prospects of Hong Kong's housing and will continue to invest in the land, so the Group's residential project in Ho Man Tin will soon be put on sale.
The application for the No.4 land site on district 4C under forfeiture of deposit this time was closed on 15th last month, with 6 tenders were received, finally it was won by Goldin at HKD11.1244 billion, and it not only was the first runway commercial land approved by the government, but also its sq ft floor area land price of HKD12,888 was the new high among commercial land sq ft prices in East Kowloon district. Goldin had expressed to build it into landmark hotel and office building with an estimated total investment of about HKD16-18 billion. The stock price of Goldin Financial closed at HKD2.31yesterday, no rise or fall.
Liang Zhijian: It is no hindrance to corporate investment intentions.
The Chairman of the Executive Committee of the Real Estate Developers Association, Leung Chi-kin, believes that Goldin had their own reason to give up this project, and there is only one company to abandon the bid, which is believed an individual incident, and probably will not cause too much influences to the investment intention of the market from other companies.