by winston » Tue Jan 05, 2016 7:41 am
not vested
New World back on China privatize track
by Jennifer Li
New World Development (0017) is planning to privatize its subsidiary New World China (0917) in a deal that could be worth HK$16.38 billion.
The deal would mark a second attempt after NWD failed to take the China unit private for HK$18.72 billion in March 2014, as independent shareholders rejected the offer of HK$6.80 per share, forcing chairman Henry Cheng Kar-shun to wait at least a year for another try.
Trading in the two developers was suspended yesterday, pending the announcement related to "takeovers and mergers," they said in the notes to local bourse.
The announcement is expected to be made this week, Bloomberg reported.
NWD said in the proposal two years ago that the fundraising ability of its China unit was limited due to less liquidity of the shares, while a privatization could help increase financing opportunities and improve flexibility to manage its business.
"It's the right time [to propose again] ... NWD has always wanted to privatize NWC, but the offer price last time was too low for investors," said Linus Yip Sheung-chi, First Shanghai Securities chief strategist.
Since the deal lapsed, New World China shares have traded below the seven-year high of HK$6.54 in March 2014.
They closed at HK$6.21 on December 31, up 35.3 percent from the beginning of 2015, mainly thanks to a sharp surge after the announcement of several deals to sell mainland assets to Evergrande Real Estate Group (3333).
NWD, already holding 70.32 percent stake of New World China and about HK$31 billion in cash as of June 30, has more than enough money for the offer this time, according to BoCom International Holdings.
"There's no pressure financially, and its a very reasonable thing for them to do," BoCom International analyst Alfred Lau said.
New World China, listed in 1999 at HK$9.50 a share, has residential, retail, office, and hotel projects in more than 20 mainland cities, including Beijing and Shanghai, according to its website.
Source: The Standard
It's all about "how much you made when you were right" & "how little you lost when you were wrong"