Glorious Property Founder Forming Group for Privatizationby
Company requests Oct. 31 deadline for a firm offer to be made
Controlling shareholder Zhang in talks with financial investor
Zhang Zhi Rong, the controlling shareholder of Chinese property developer Glorious Property Holdings Ltd., plans to form a group of investors to help him take the company private, and will make a formal proposal by Oct. 31. The shares surged.
The consortium will include at least one financial institution that has expressed interest in participating, the company’s board said in a statement to the Hong Kong stock exchange late Thursday. Negotiations on seeking finance from a second financial institution were ongoing, according to the statement.
Zhang first notified the stock exchange he was considering a privatization in March 2015. Since no formal offer had been made, the Securities and Futures Commission "expressed concern over the lapse of 16 months" and requested the company submit a so-called “put up or shut up” application requiring him to announce a firm intention by Oct. 31.
Shares of the Shanghai-based developer were suspended Monday in Hong Kong and resumed trading Friday, surging 18 percent to 92 Hong Kong cents as of 9:34 a.m. local time. That gives the company a market capitalization of about HK$6.9 billion ($894 million).
Zhang held 63.89 percent of the shares as of the end of December, according to data compiled by Bloomberg.
Glorious, which reported that its net loss widened in 2015, said last year that it was selling assets and negotiating with lenders to ease its financial burden after falling behind in servicing its loans.
The group’s net loss widened to 3.88 billion yuan ($582 million) in 2015 from a loss of 3 billion yuan in the previous year, Glorious reported in April. Glorious’s external auditor PricewaterhouseCoopers LLP said the developer hadn’t repaid 5.2 billion yuan of loan principal and interest in accordance with the repayment schedules as of Dec. 31.