Taken from the Reuters agency
Shares in Chinese Estates Holdings (0127.HK) , a former major shareholder in developer China Evergrande (3333.HK) , rose as much as 32% today after announcing a bid to go private for HK$1.91 billion ($245 million).
The Hong Kong developer said on Wednesday that the family of Chinese Estates' largest shareholder, Joseph Lau, had proposed taking it private by offering minority shareholders a 38% premium over its last negotiated price.
The offer represents the latest move by Lau and China Estates to emerge from the shadow of Evergrande, which is reeling from a massive debt burden and threatening the Hong Kong company's future.
Evergrande's former second-largest shareholder, Chinese Estates, has already reduced its stake in recent months to 4.39% from 6.48%. It has set a goal of exiting the stake entirely and estimates a loss of HK$10.41 billion for the current year from the sale. Read more
Eugene Law, director of business development at China Galaxy International Financial, said that as a publicly traded company, Chinese Estates would need to keep updating its position in Evergrande and that it "doesn't want those problems.".
Evergrande, once China's best-selling real estate group, is facing one of the country's largest defaults in history as it grapples with over $300 billion in debt. Its fate is also unsettling global markets, worried about the fallout from the collapse of one of China's largest borrowers.
Shares in Chinese Estates rose to HK$3.81 by midday. They resumed trading on Thursday after being suspended on September 29.
Shares in the Hong Kong developer fell 42% this year before trading was suspended, dragged down by unrealized losses on its investment in Evergrande, whose shares were hit by the liquidity crisis and default risks.
In a statement late Wednesday, Chinese Estates said its share price could be further impacted by Evergrande, as it is "cautious and concerned" about recent developments at the Chinese developer.
Delisting would reduce administrative costs and resources for maintaining listed status, Chinese Estates added, and could provide more flexibility to implement long-term business strategies.
In addition to Evergrande, Chinese Estates said it also has significant investments in another Chinese developer, Kaisa Group (1638.HK) , whose shares have also suffered declines in recent months due to broader liquidity concerns about China's real estate sector.
Former Chinese Estates chairman Lau has been a major backer of Evergrande chairman Hui Ka Yan and is a member of the so-called "poker club" of Hong Kong tycoons that includes Hui. Read more
Lau, whose family owns about 75% of Chinese Estates' share capital, resigned from his position as chairman and chief executive in 2014 after being convicted of bribery and money laundering charges at the Macau gambling center.
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