Shares of ally of China Evergrande Group tumbled
Chinese Estates Holdings Ltd. shares tumbled by a record after the company failed to get sufficient shareholder support to go private.
The property firm, a long-time ally of China Evergrande Group, plunged as much as 35% to HK$2.45 in Hong Kong trading on Monday morning. On Friday, minority shareholders rejected its plan to be bought out at HK$4 a share.
Among the 74 stockholders participating, 64 voted no and made up 10.8% of the shares among the investors, according to a stock exchange filing. The Hong Kong real estate firm, owned by the family of billionaire Joseph Lau, announced the privatization plans in October when its shares were dropping amid mounting concern over Evergrande’s financial health.
As members of the so-called Poker Club for real estate tycoons, Lau and Evergrande Chairman Hui Ka Yan have a long history of business connections. Chinese Estates was a major shareholder of Evergrande before paring its stake beginning in August, and it has said it might sell all its shares in the debt-laden developer. The company has said it expects a loss of HK$10.6 billion ($1.4 billion) if it gets rid of its entire Evergrande holding.
Solar Bright, a British Virgin Islands company ultimately owned by Lau’s wife Chan Hoi-wan, had offered to take Chinese Estates private. The Lau family and related parties, which hold more than 78% of the company, didn’t cast votes.
