Glorious Property Holdings Ltd. (845) fell by a record in Hong Kong trading after shareholders rejected an offer by Chinese billionaire Zhang Zhirong to take the company private.
Glorious Property dropped as much as 30 percent and closed 27 percent lower at HK$1.25, the biggest decline since Oct. 2, 2009. The Hang Seng Index fell 0.9 percent.
The company’s shares traded at less than half their net asset value before the offer, tracking a slide in China Rongsheng Heavy Industries Group Holdings Ltd. (1101) after the shipyard co-founded by Zhang sought a government bailout. Zhang quit as chairman of both Glorious Property and Rongsheng in November 2012.
“Glorious needs to speed up its asset disposal to improve its asset turnover and valuations,” Standard Chartered Plc Hong Kong-based analysts Andy So and Raymond Cheng wrote in a report after the buyout offer didn’t gain enough support at a meeting in Hong Kong on Jan. 17.
The offer lapsed after 62 investors voted against the plan and 58 holders voted in favor, according to a filing to the city’s stock exchange. Zhang can’t make another bid for 12 months, except with regulatory consent, the company said in the statement Jan. 17.
Rongsheng shares rose as much as 3.8 percent and finished the day 2.3 percent higher at HK$1.34.
Zhang, who owns 68.4 percent of Glorious Property, offered as much as HK$4.57 billion ($589 million) for the developer, according to a November filing. He offered HK$1.80 a share for Glorious Property, 45 percent more than the then most-recent price of HK$1.24, for all outstanding stock, the filing showed.
Contracted sales by the developer, which has residential, office and retail projects in 12 Chinese cities, slumped 33 percent last year amid property curbs aimed at cooling China’s housing market. Developers, including Glorious Property, face rising default risks as funding options narrow, according to Standard & Poor’s.
Glorious Property was the only listed developer with declining sales in China, hurt by a relatively high ratio of short-term loans and tight liquidity, Samson Man, an analyst at CMB International Capital Corp. with a sell rating on the stock, wrote in a report today.
“The outlook will not improve until Glorious adjusts its pricing to the market conditions,” Man said.
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